NBT BANCORP INC

Previous wording

The purpose of this discussion and analysis is to provide a concise description of the consolidated financial condition and results of operations of NBT Bancorp Inc. (“NBT”) and its wholly-owned subsidiaries, including NBT Bank, National Association (the “Bank”), NBT Financial Services, Inc. (“NBT Financial”) and NBT Holdings, Inc. (“NBT Holdings”) (collectively referred to herein as the “Company”). When references to “NBT,” “we,” “our,” “us,” and “the Company” are made in this report, we mean NBT Bancorp Inc. and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, NBT Bancorp Inc. When we refer to the “Bank” in this report, we mean our only bank subsidiary, NBT Bank, National Association, and its subsidiaries. This discussion will focus on results of operations and financial condition, including capital resources and asset/liability management. Reference should be made to the Company’s consolidated financial statements and footnotes thereto included in this Form 10‑Q as well as to the Company’s Annual Report on Form 10‑K for the year ended December 31, 2025 for an understanding of the following discussion and analysis. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results of the full year ending December 31, 2026 or any future period.

Current wording

The purpose of this discussion and analysis is to provide a concise description of the consolidated financial condition and results of operations of NBT Bancorp Inc. (“NBT”) and its wholly-owned subsidiaries, including NBT Bank, National Association (the “Bank”), NBT Financial Services, Inc. (“NBT Financial”) and NBT Holdings, Inc. (“NBT Holdings”) (collectively referred to herein as the “Company”). When references to “NBT,” “we,” “our,” “us,” and “the Company” are made in this report, we mean NBT Bancorp Inc. and our consolidated subsidiaries, unless the context indicates that we refer only to the parent company, NBT Bancorp Inc. When we refer to the “Bank” in this report, we mean our only bank subsidiary, NBT Bank, National Association, and its subsidiaries. This discussion will focus on results of operations and financial condition, including capital resources and asset/liability management. Reference should be made to the Company’s consolidated financial statements and footnotes thereto included in this Form 10‑Q as well as to the Company’s Annual Report on Form 10‑K for the year ended December 31, 2025 for an understanding of the following discussion and analysis. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results of the full year ending December 31, 2026 or any future period.

Previous wording

This Quarterly Report on Form 10-Q contains financial information determined by methods other than in accordance with GAAP. Where non-GAAP disclosures are used in this Form 10-Q, the comparable GAAP measure, as well as a reconciliation to the comparable GAAP measure, is provided in the accompanying tables. Management believes that these non-GAAP measures provide useful information that is important to an understanding of the results of the Company’s core business as well as provide information standard in the financial institution industry. Non-GAAP measures should not be considered a substitute for financial measures determined in accordance with GAAP and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Amounts previously reported in the consolidated financial statements are reclassified whenever necessary to conform to current period presentation.

Current wording

This Quarterly Report on Form 10-Q contains financial information determined by methods other than in accordance with GAAP. Where non-GAAP disclosures are used in this Form 10-Q, the comparable GAAP measure, as well as a reconciliation to the comparable GAAP measure, is provided in the accompanying tables. The Company presents certain financial measures on an “operating” and “tangible” basis. Operating results exclude the after-tax impact of acquisition expenses, acquisition-related provision for credit losses and securities gains (losses). Tangible results exclude goodwill and intangible assets, net of accumulated amortization and applicable deferred tax effects. Management believes these non-GAAP measures provide investors and analysts with additional insight into the Company's core operating performance and facilitate comparisons across reporting periods and with financial institutions that have not engaged in acquisitions. The Company also reports net interest income and net interest margin on an FTE basis. The FTE adjustment reflects the tax benefit associated with tax-exempt securities and loans by assuming they were taxable. Management believes that presentation of net interest income and net interest margin on an FTE basis is a standard practice within the banking industry that enhances comparability among financial institutions. Non-GAAP measures should not be considered a substitute for financial measures determined in accordance with GAAP and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Amounts previously reported in the consolidated financial statements are reclassified whenever necessary to conform to current period presentation.

Previous wording

One of the most significant judgments involved in estimating the Company’s allowance for credit losses relates to the macroeconomic forecasts used to estimate expected credit losses over the forecast period. At June 30, 2026, the weightings were 60%, 5% and 35% for the baseline, upside and downside economic forecast scenarios, respectively. The baseline outlook reflected an economic environment where the northeast unemployment rate increases from 4.46% in the second quarter of 2026 to 4.65% by the end of the forecast period, with a peak northeast unemployment rate of 4.69% in the second quarter of 2027. National GDP annualized growth (on a quarterly basis) is expected to start the third quarter of 2026 at approximately 1.95% and decrease to 1.93% by the end of the forecast period. Key assumptions in the baseline economic outlook included the Federal Reserve keeping their policy rate in the current range of 3.50%-3.75% and the economy remaining at full employment. The alternative upside scenario assumes improved economic conditions from the baseline outlook. Under this scenario, northeast unemployment falls from 4.46% in the second quarter of 2026 to 3.85% in the third quarter of 2027 and eventually settles at 3.90% by the end of the forecast period. The alternative downside scenario with recessionary conditions assumes deteriorated economic conditions from the baseline outlook. Under this scenario, northeast unemployment rises from 4.46% in the second quarter of 2026 to a peak of 7.81% in the third quarter of 2027. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of June 30, 2026. Additional qualitative adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools.

Current wording

One of the most significant judgments involved in estimating the Company’s allowance for credit losses relates to the macroeconomic forecasts used to estimate expected credit losses over the forecast period. At September 30, 2026, the weightings were 60%, 5% and 35% for the baseline, upside and downside economic forecast scenarios, respectively. The baseline outlook reflected an economic environment where the northeast unemployment rate increases from 4.27% in the third quarter of 2026 to 4.74% by the end of the forecast period, with a peak northeast unemployment rate of 4.76% in the fourth quarter of 2027. National GDP annualized growth (on a quarterly basis) is expected to start the fourth quarter of 2026 at approximately 1.56% and increase to 2.08% by the end of the forecast period. Key assumptions in the baseline economic outlook included the Federal Reserve policy rate of 3.50%-3.75% and the economy remaining at full employment. The alternative upside scenario assumes improved economic conditions from the baseline outlook. Under this scenario, northeast unemployment falls from 4.27% in the third quarter of 2026 to 3.88% in the first quarter of 2027 and eventually settles at 4.01% by the end of the forecast period. The alternative downside scenario with recessionary conditions assumes deteriorated economic conditions from the baseline outlook. Under this scenario, northeast unemployment rises from 4.27% in the third quarter of 2026 to a peak of 7.64% in the fourth quarter of 2027. These scenarios and their respective weightings are evaluated at each measurement date and reflect management’s expectations as of September 30, 2026. Additional qualitative adjustments were made for factors not incorporated in the forecasts or the model, such as loss rate expectations for certain loan pools.

Previous wording

To demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of June 30, 2026, the Company changed the scenario weightings, with a 10% increase to the downside scenario and a 10% decrease to the baseline scenario causing a 3.6% increase in the overall estimated allowance for credit losses. If instead the upside scenario was increased 10% and the baseline scenario was decreased 10%, the overall estimated allowance for credit losses decreased 0.8%. To further demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of June 30, 2026, the Company increased the downside scenario to 100% which resulted in a 23.8% increase in the overall estimated allowance for credit losses.

Current wording

To demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of September 30, 2026, the Company changed the scenario weightings, with a 10% increase to the downside scenario and a 10% decrease to the baseline scenario causing a 3.4% increase in the overall estimated allowance for credit losses. If instead the upside scenario was increased 10% and the baseline scenario was decreased 10%, the overall estimated allowance for credit losses decreased 0.8%. To further demonstrate the sensitivity of the allowance for credit losses estimate to macroeconomic forecast weightings assumptions as of September 30, 2026, the Company increased the downside scenario to 100% which resulted in a 22.8% increase in the overall estimated allowance for credit losses.

Previous wording

The Company incurred acquisition expenses related to the merger of $17.2 million and $18.4 million for the three and six months ended June 30, 2025, respectively.

Current wording

The Company incurred acquisition expenses related to the merger of $1.1 million and $19.5 million for the three and nine months ended September 30, 2025, respectively.

Previous wording

Net income for the three months ended June 30, 2026 was $53.0 million, up $1.9 million from the first quarter of 2026 and up $30.5 million from the second quarter of 2025. Diluted earnings per share were $1.02 for the three months ended June 30, 2026, up $0.04 from the first quarter of 2026 and up $0.58 from the second quarter of 2025. Net income for the six months ended June 30, 2026 was $104.2 million, or $1.99 per diluted common share, up $44.9 million from $59.3 million, or $1.21 per diluted common share for the six months ended June 30, 2025.

Current wording

Net income for the three months ended September 30, 2026 was $58.0 million, up $5.0 million from the second quarter of 2026 and up $3.6 million from the third quarter of 2025. Diluted earnings per share were $1.11 for the three months ended September 30, 2026, up $0.09 from the second quarter of 2026 and up $0.08 from the third quarter of 2025. Net income for the nine months ended September 30, 2026 was $162.2 million, or $3.10 per diluted common share, up $48.5 million from $113.7 million, or $2.26 per diluted common share for the nine months ended September 30, 2025.

Previous wording

Operating net income(1), a non-GAAP measure, was $52.9 million, or $1.01 per diluted common share, for the three months ended June 30, 2026, compared to $0.97 per diluted common share for the first quarter of 2026 and $0.88 per diluted common share for the second quarter of 2025. Operating net income(1) for the six months ended June 30, 2026 was $103.7 million, or $1.98 per diluted common share, up $20.3 million from $83.4 million, or $1.70 per diluted common share for the six months ended June 30, 2025.

Current wording

Operating net income(1), a non-GAAP measure, was $58.0 million, or $1.11 per diluted common share, for the three months ended September 30, 2026, compared to $1.01 per diluted common share for the second quarter of 2026 and $1.05 per diluted common share for the third quarter of 2025. Operating net income(1) for the nine months ended September 30, 2026 was $161.7 million, or $3.09 per diluted common share, up $23.0 million from $138.7 million, or $2.76 per diluted common share for the nine months ended September 30, 2025.

Previous wording

The following information should be considered in connection with the Company’s results for the three and six months ended June 30, 2026:

Current wording

The following information should be considered in connection with the Company’s results for the three and nine months ended September 30, 2026:

Previous wording

Non-GAAP measure - Refer to non-GAAP reconciliation below.

Current wording

(1) Non-GAAP measure - Refer to the non-GAAP reconciliations below.

Previous wording

Non-GAAP measure - Refer to non-GAAP reconciliation below.

Current wording

(1) Non-GAAP measure - Refer to the non-GAAP reconciliations below.

Previous wording

Net interest income was $137.0 million for the second quarter of 2026, up $2.6 million, or 1.9%, from the previous quarter. The FTE NIM was 3.73% for the three months ended June 30, 2026, an increase of 1 bp from the previous quarter. Interest income increased $3.1 million, or 1.7%, as average interest-earning assets of $14.80 billion increased $109.8 million from the prior quarter, while the yield on average interest-earning assets decreased 1 bp from the prior quarter to 5.05%. The increase in interest income was primarily due to one additional day in the second quarter of 2026 and organic growth in interest-earning assets. Interest expense increased $0.5 million, or 1.0%, as the cost of interest-bearing liabilities decreased 1 bp to 1.94% for the three months ended June 30, 2026 as compared to the prior quarter, primarily due to a 3 bps decrease in interest-bearing deposit costs. Included in net interest income was $5.7 million of acquisition-related net accretion for the three months ended June 30, 2026, compared to $6.7 million of acquisition-related net accretion for the three months ended March 31, 2026.

Current wording

Netinterest income was $142.1 million for the third quarter of 2026, up $5.1 million, or 3.7%, from the previous quarter. The FTE NIM was 3.78% for the three months ended September 30, 2026, an increase of 5 bps from the previous quarter. Interest income increased $6.6 million, or 3.6%, as average interest-earning assets of $14.98 billion increased $173.6 million from the prior quarter, while the yield on average interest-earning assets increased 6 bps from the prior quarter to 5.11%. The increase in interest income was driven by organic growth in average loans, one additional day in the third quarter of 2026 and a $1.5 million increase in purchase accounting accretion. Interest expense increased $1.5 million, or 3.1%, primarily due to an increase in the average balances of short-term borrowings and federal funds purchased and the rates paid on those borrowings, partially offset by the redemption of $25 million of subordinated debt in the prior quarter. Included in net interest income was $7.3 million of acquisition-related net accretion for the three months ended September 30, 2026, compared to $5.7 million of acquisition-related net accretion for the three months ended June 30, 2026.

Previous wording

Net interest income was $137.0 million for the second quarter of 2026, up $12.7 million, or 10.3%, from the second quarter of 2025. The FTE NIM was 3.73% for the three months ended June 30, 2026, an increase of 14 bps from the second quarter of 2025. Interest income increased $8.2 million, or 4.6%, as average interest-earning assets increased $846.2 million, or 6.1%, from the second quarter of 2025, primarily due to the addition of $1.95 billion in interest-earning assets in May 2025 from the Evans acquisition and organic earning asset growth. The yield on average interest-earning assets decreased 7 bps from the same period in 2025 to 5.05%, primarily due to the Federal Reserve interest rates cuts in 2025. Interest expense decreased $4.6 million, or 8.5%, primarily due to the decrease in the cost of interest-bearing liabilities and the redemption of $118 million of subordinated debt in the third quarter of 2025. Included in net interest income was $5.7 million of acquisition-related net accretion for the three months ended June 30, 2026, compared to $5.0 million of acquisition-related net accretion for the three months ended June 30, 2025.

Current wording

Netinterest income was $142.1 million for the third quarter of 2026, up $7.4 million, or 5.5%, from the third quarter of 2025. The FTE NIM was 3.78% for the three months ended September 30, 2026, an increase of 12 bps from the third quarter of 2025. Interest income increased $1.9 million, or 1.0%, as average interest-earning assets increased $334.7 million, or 2.3%, from the third quarter of 2025, primarily due to organic growth in interest-earning assets. The yield on average interest-earning assets decreased 7 bps from the same period in 2025 to 5.11%, primarily due to the Federal Reserve interest rates cuts in 2025. Interest expense decreased $5.5 million, or 9.8%, primarily driven by interest-bearing deposit costs decreasing 28 bps and the redemption of $25 million of subordinated debt in the second quarter of 2026. This decrease was partially offset by an increase in the average balances of short-term borrowings and federal funds purchased and the rates paid on those borrowings. Included in net interest income was $7.3 million of acquisition-related net accretion for the three months ended September 30, 2026, compared to $6.3 million of acquisition-related net accretion for the three months ended September 30, 2025.

Previous wording

Net interest income for the six months ended June 30, 2026 was $271.3 million, up $39.9 million, or 17.2%, from the same period in 2025. The FTE NIM was 3.73% for the six months ended June 30, 2026, an increase of 21 bps from the same period in 2025. Interest income increased $36.4 million, or 11.0%, as the yield on average interest-earning assets increased 1 bp from the same period in 2025 to 5.05%. Average interest-earning assets of $14.75 billion increased $1.42 billion primarily due to the addition of $1.95 billion in interest-earning assets in May 2025 from the Evans acquisition and organic earning asset growth. Interest expense decreased $3.4 million, or 3.4%, for the six months ended June 30, 2026 as compared to the same period in 2025 driven by interest-bearing deposit costs decreasing 25 bps and lower average balances of subordinated debt. The decrease in interest expense was partially offset by the addition of $1.62 billion in interest-bearing liabilities in May 2025 from the Evans acquisition and organic growth. Included in net interest income was $12.4 million of acquisition-related net accretion for the six months ended June 30, 2026, compared to $7.2 million of acquisition-related net accretion for the six months ended June 30, 2025.

Current wording

Netinterest income for the nine months ended September 30, 2026 was $413.4 million, up $47.3 million, or 12.9%, from the same period in 2025. The FTE NIM was 3.74% for the nine months ended September 30, 2026, an increase of 17 bps from the same period in 2025. Interest income increased $38.4 million, or 7.3%, as average interest-earning assets of $14.83 billion increased $1.05 billion primarily due to the addition of $1.95 billion in interest-earning assets in May 2025 from the Evans acquisition and organic earning asset growth. The yield on average interest-earning assets decreased 2 bps from the same period in 2025 to 5.07%, primarily due to the Federal Reserve interest rates cuts in 2025. Interest expense decreased $8.9 million, or 5.7%, for the nine months ended September 30, 2026 as compared to the same period in 2025 driven by interest-bearing deposit costs decreasing 26 bps and lower average balances of subordinated debt. The decrease in interest expense was partially offset by the addition of $1.62 billion in interest-bearing liabilities in May 2025 from the Evans acquisition, organic growth and an increase in the average balances of short-term borrowings and the rate paid on those borrowings. Included in net interest income was $19.7 million of acquisition-related net accretion for the nine months ended September 30, 2026, compared to $13.6 million of acquisition-related net accretion for the nine months ended September 30, 2025.

Previous wording

The increase from the prior quarter was primarily driven by an increase in card services income and retirement plan administration fees. Card services income increased from the prior quarter driven by seasonal increased volumes. Retirement plan administration fees increased from the prior quarter driven by higher activity-based fees, additional fees from new customer relationships and increased market values of assets under administration.

Current wording

The increase from the prior quarter was primarily driven by an increase ininsurance services income, service charges on deposits accounts, retirement plan administration fees and other income. Insurance services increased from the prior quarter due to seasonal renewals. Service charges on deposit accounts increased from the prior quarter reflecting the impact of deposit account pricing initiatives implemented during the quarter, changes in customer deposit mix and higher transaction-related fee income. Retirement plan administration fees increased from the prior quarter driven by higher activity-based fees, additional fees from new customer relationships and increased market values of assets under administration. Other income increased $0.7 million from the prior quarter driven by higher commercial loan swap fees.

Previous wording

Noninterest income for the six months ended June 30, 2026 was $99.9 million, up $5.5 million, or 5.8%, from the same period in 2025. Excluding net securities gains, noninterest income for the six months ended June 30, 2026 was $99.2 million, up $4.9 million, or 5.2%, from the same period in 2025. The increase from the prior year was primarily due to an increase in retirement plan administration fees, which were driven by higher activity-based fees, additional fees from new customer relationships and increased market values of assets under administration. Service charges on deposit accounts and card services income increased from the same period in 2025 primarily due to the Evans acquisition.

Current wording

Noninterest income for the nine months ended September 30, 2026 was $152.8 million, up $7.0 million, or 4.8%, from the same period in 2025. Excluding net securities gains (losses), noninterest income for the nine months ended September 30, 2026 was $152.1 million, up $6.3 million, or 4.4%, from the same period in 2025. The increase from the prior year was primarily due to an increase in retirement plan administration fees, service charges on deposit accounts and card services income. The increase in retirement plan administration fees was driven by higher activity-based fees, additional fees from new customer relationships and increased market values of assets under administration. Service charges on deposit accounts and card services income increased from the same period in 2025 primarily due to the Evans acquisition. In addition, services charges on deposit accounts increased from the same period in 2025 due to the impact of deposit account pricing initiatives implemented during the third quarter of 2026, changes in customer account mix and higher transaction-related fee income. These increases were partially offset by a decrease in bank owned life insurance income due to lower gains recognized during the nine months ended September 30, 2026 compared to the same period in 2025. Included in other noninterest income for the nine months ended September 30, 2025 was a $0.6 million gain related to the finalization of a third-party contractual arrangement.

Previous wording

The decrease from the prior quarter was primarily driven by a decrease in occupancy costs due to the first quarter of 2026 having higher seasonal maintenance and utilities costs due to harsh winter conditions across the footprint. The decrease from the prior quarter was partially offset by an increase in salaries and employee benefits driven by a full quarter of merit pay increases, one additional payroll day and higher medical expenses, which were partially offset by lower payroll taxes and stock-based compensation expenses which are seasonally higher in the first quarter.

Current wording

The increase from the prior quarter was primarily driven by an increase in salaries and employee benefits and other expenses. Salaries and employee benefits increased from the prior quarter driven by one additional payroll day and higher incentive compensation expenses, which were partially offset by lower medical expenses and lower payroll taxes. Other expenses increased from the prior quarter primarily driven by an increase in activity-based costs.

Previous wording

Noninterest expense for the six months ended June 30, 2026 was $223.7 million, up $1.2 million, or 0.5%, from the same period in 2025. Excluding acquisition expenses, noninterest expense for the six months ended June 30, 2026 was $223.7 million, up $19.6 million, or 9.6%, from the same period in 2025. The increase from the prior year was driven by higher salaries and employee benefits due to the Evans acquisition, merit pay increases, higher medical expenses, higher incentive compensation expenses and other benefit costs. The increase in technology and data services was driven by the Evans acquisition, timing of planned activities and ongoing investment in enterprise technology initiatives. Occupancy expense was impacted by additional expenses from the Evans acquisition, higher utilities and higher facilities costs related to new banking locations. Professional fees and outside services increased from the prior year primarily due to the Evans acquisition and the timing of various initiatives. In addition, the increase in amortization of intangible assets was due to the amortization of the core deposit intangible asset related to the Evans acquisition.

Current wording

Noninterest expense for the nine months ended September 30, 2026 was $338.8 million, up $5.2 million, or 1.6%, from the same period in 2025. Excluding acquisition expenses, noninterest expense for the nine months ended September 30, 2026 was $338.8 million, up $24.7 million, or 7.9%, from the same period in 2025. The increase from the prior year was driven by higher salaries and employee benefits due the Evans acquisition, merit pay increases, higher medical expenses, higher incentive compensation expenses and other benefit costs. The increase in technology and data services was driven by the Evans acquisition, timing of planned activities and ongoing investment in enterprise technology initiatives. Occupancy expense was impacted by additional expenses from the Evans acquisition, higher utilities and higher facilities costs related to new banking locations. Professional fees and outside services increased from the prior year primarily due to the Evans acquisition and the timing of various initiatives. In addition, the increase in amortization of intangible assets was due to the amortization of the core deposit intangible asset related to the Evans acquisition.

Previous wording

Income tax expense for the three months ended June 30, 2026 was $16.1 million, up $0.6 million from the prior quarter and up $7.9 million from the second quarter of 2025. The effective tax rate was 23.3% for the second quarter of 2026, which was consistent with the prior quarter and down from 26.7% for the second quarter of 2025. The decrease in the effective tax rate from the second quarter of 2025 was primarily due to the second quarter of 2025 estimated impact of nondeductible acquisition expenses related to the Evans acquisition and a lower level of tax-exempt income as a percentage of total pretax income.

Current wording

Income tax expense for the three months ended September 30, 2026 was $18.0 million, up $2.0 million from the prior quarter and up $0.7 million from the third quarter of 2025. The effective tax rate was 23.7% for the third quarter of 2026, up from 23.3% in the prior quarter and down from 24.2% for the third quarter of 2025. The increase in the effective tax rate from the prior quarter was due to a lower level of tax-exempt income as a percentage of total taxable income. The decrease in the effective tax rate from the third quarter of 2025 was due to acquisition related tax items in 2025 that did not recur.

Previous wording

Income tax expense for the six months ended June 30, 2026 was $31.6 million, up $12.9 million from the same period in 2025. The effective tax rate was 23.3% for the six months ended June 30, 2026, compared to 24.0% for the six months ended June 30, 2025. The decrease in the effective tax rate from 2025 was primarily due to the 2025 estimated impact of nondeductible acquisition expenses related to the Evans acquisition and a lower level of tax-exempt income as a percentage of total pretax income.

Current wording

Income tax expense for the nine months ended September 30, 2026 was $49.7 million, up $13.6 million from the same period in 2025. The effective tax rate was 23.4% for the nine months ended September 30, 2026, compared to 24.1% for the nine months ended September 30, 2025. The decrease in the effective tax rate from 2025 was due to acquisition related tax items in 2025 that did not recur and a lower level of tax-exempt income as a percentage of total taxable income.

Previous wording

Total securities increased $137.7 million, or 5.1% from December 31, 2025 to June 30, 2026. The securities portfolio represented 17.3% of total assets as of June 30, 2026 as compared to 16.7% of total assets as of December 31, 2025.

Current wording

Total securities increased $173.6 million, or 6.5% from December 31, 2025 to September 30, 2026. The securities portfolio represented 17.4% of total assets as of September 30, 2026 as compared to 16.7% of total assets as of December 31, 2025.

Previous wording

Total loans were $11.87 billion and $11.60 billion at June 30, 2026 and December 31, 2025, respectively. Period end loans increased by $276.0 million from December 31, 2025 to June 30, 2026, which included a $52.4 million decrease in the other consumer and residential solar portfolios, which are in a planned run-off status. From December 31, 2025 to June 30, 2026 C&I loans increased $83.1 million to $1.76 billion; CRE loans increased $94.6 million to $4.89 billion; and total consumer loans increased $98.2 million to $5.23 billion. Total loans represent approximately 73.2% of assets as of June 30, 2026, as compared to 72.5% as of December 31, 2025.

Current wording

Total loans were $11.95 billion and $11.60 billion at September 30, 2026 and December 31, 2025, respectively. Period end loans increased by $350.4 million from December 31, 2025 to September 30, 2026, which included a $76.8 million decrease in the other consumer and residential solar portfolios, which are in a planned run-off status. From December 31, 2025 to September 30, 2026 C&I loans increased $77.0 million to $1.75 billion; CRE loans increased $156.9 million to $4.96 billion; and total consumer loans increased $116.5 million to $5.24 billion. Total loans represent approximately 72.9% of assets as of September 30, 2026, as compared to 72.5% as of December 31, 2025.

Previous wording

Within the CRE portfolio, approximately 79% are comprised of Non-Owner Occupied CRE, with the remaining 21% being Owner-Occupied CRE. Non-Owner Occupied CRE includes diverse sectors across the Company’s markets such as residential rental properties (45%) and office spaces (13%), along with retail, manufacturing, mixed use, hotels and others. As of June 30, 2026 and December 31, 2025, the total CRE construction and development loans amounted to $431.1 million and $405.3 million, respectively.

Current wording

Within the CRE portfolio, approximately 79% are comprised of Non-Owner Occupied CRE, with the remaining 21% being Owner-Occupied CRE. Non-Owner Occupied CRE includes diverse sectors across the Company’s markets such as residential rental properties (45%) and office spaces (13%), along with retail, manufacturing, mixed use, hotels and others. As of September 30, 2026 and December 31, 2025, the total CRE construction and development loans amounted to $435.8 million and $405.3 million, respectively.

Previous wording

The allowance for credit losses totaled $140.5 million at June 30, 2026, compared to $138.6 million at March 31, 2026 and $140.2 million at June 30, 2025. The allowance for credit losses as a percentage of loans was 1.18% at June 30, 2026, compared to 1.20% at March 31, 2026 and 1.21% at June 30, 2025. The allowance for credit losses was 215.13% of nonperforming loans at June 30, 2026, compared to 226.27% at March 31, 2026 and to 302.21% at June 30, 2025. The allowance for credit losses as of June 30, 2026 increased compared to the allowance estimates as of March 31, 2026, primarily due to providing for loan growth and slight deterioration in the economic forecast. These increases to the allowance for credit losses were partially offset by accelerated prepayment speeds and the change in loan composition and balances including reductions driven by other consumer and residential solar portfolios that are in a planned run-off status.

Current wording

The allowance for credit losses totaled $140.0 million at September 30, 2026, compared to $140.5 million at June 30, 2026 and $139.0 million at September 30, 2025. The allowance for credit losses as a percentage of loans was 1.17% at September 30, 2026, compared to 1.18% at June 30, 2026 and 1.20% at September 30, 2025. The allowance for credit losses was 200.05% of nonperforming loans at September 30, 2026, compared to 215.13% at June 30, 2026 and to 260.22% at September 30, 2025. The allowance for credit losses as of September 30, 2026 decreased compared to the allowance estimates as of June 30, 2026, primarily due to improvements in the economic forecast and accelerated prepayment speeds. These decreases were partially offset by the change in loan composition and balances including reductions in other consumer and residential solar portfolios that have higher allowance coverage ratios.

Previous wording

The allowance for credit losses as of June 30, 2026 increased compared to the allowance estimates as of June 30, 2025, primarily due to providing for the second quarter of 2026 loan growth, change in scenario weightings and the establishment of specific reserves for individually evaluated loans in the first quarter of 2026. These increases to the allowance for credit losses were largely offset by model adjustments, accelerated prepayment speeds and the changes in loan composition and balances including reductions driven by other consumer and residential solar portfolios that are in a planned run-off status. First quarter 2026 model adjustments lowered the allowance, as updates from the annual model review and recalibration process incorporated recent delinquency and loss experience which reflected improved default estimates across most portfolio segments.

Current wording

The allowance for credit losses as of September 30, 2026 increased compared to the allowance estimates as of September 30, 2025, primarily due to providing for the current year loan growth, change in scenario weightings and the establishment of specific reserves for individually evaluated loans in 2026. These increases to the allowance for credit losses were partially offset by improvements in the economic forecast, model adjustments, accelerated prepayment speeds and the changes in loan composition and balances including reductions in other consumer and residential solar portfolios. First quarter 2026 model adjustments lowered the allowance, as updates from the annual model review and recalibration process incorporated recent delinquency and loss experience which reflected improved default estimates across most portfolio segments.

Previous wording

The provision for loan losses was $6.1 million for the three months ended June 30, 2026, compared to $5.6 million in the prior quarter and $17.8 million for the same period in the prior year. Provision expense increased from the prior quarter primarily due to providing for the second quarter of 2026 loan growth, which was partially offset by a decrease in net charge-offs in the current quarter. Provision expense decreased from the same period in the prior year primarily due to $13.0 million of acquisition-related provision for loan losses for non-PCD loans acquired from Evans recorded in the second quarter of 2025. Net charge-offs totaled $4.2 million during the three months ended June 30, 2026, compared to net charge-offs of $5.0 million during the first quarter of 2026 and $2.4 million in the second quarter of 2025. Net charge-offs to average loans were 15 bps for the three months ended June 30, 2026, compared to 17 bps for the first quarter of 2026 and 9 bps for the three months ended June 30, 2025.

Current wording

The provision for loan losses was $3.8 million for the three months ended September 30, 2026, compared to $6.1 million in the prior quarter and $3.1 million for the same period in the prior year. Provision expense decreased from the prior quarter primarily due to lower levels of loan growth and a decrease in allowance for loan loss in the current quarter. Provision expense increased from the same period in the prior year primarily due to providing for current year loan growth and an increase in allowance for loan loss. Net charge-offs totaled $4.3 million during the three months ended September 30, 2026, compared to net charge-offs of $4.2 million during the second quarter of 2026 and $4.3 million in the third quarter of 2025. Net charge-offs to average loans were 14 bps for the three months ended September 30, 2026, compared to 15 bps for the second quarter of 2026 and 15 bps for the three months ended September 30, 2025.

Previous wording

The provision for loan losses was $11.7 million for the six months ended June 30, 2026, compared to $25.4 million for the six months ended June 30, 2025. Provision expense decreased from the same period in the prior year primarily due to $13.0 million of acquisition-related provision for loan losses for non-PCD loans acquired from Evans recorded in 2025. Net charge-offs totaled $9.2 million during the six months ended June 30, 2026, compared to net charge-offs of $8.9 million during the six months ended June 30, 2025. Net charge-offs to average loans were 16 bps for the six months ended June 30, 2026, compared to 17 bps for the six months ended June 30, 2025.

Current wording

The provision for loan losses was $15.5 million for the nine months ended September 30, 2026, compared to $28.5 million for the nine months ended September 30, 2025. Provision expense decreased from the same period in the prior year primarily due to $13.0 million of acquisition-related provision for loan losses for non-PCD loans acquired from Evans recorded in 2025. Net charge-offs totaled $13.5 million during the nine months ended September 30, 2026, compared to net charge-offs of $13.2 million during the nine months ended September 30, 2025. Net charge-offs to average loans were 15 bps for the nine months ended September 30, 2026, compared to 16 bps for the nine months ended September 30, 2025.

Previous wording

As of June 30, 2026 and March 31, 2026, the unfunded commitment reserve totaled $5.5 million, compared to $6.2 million as of June 30, 2025. The decrease from the same period in the prior year was caused by a decrease in expected loss rates, partially offset by a slight increase in pipeline exposure.

Current wording

As of September 30, 2026, the unfunded commitment reserve totaled $6.0 million, compared to $5.5 million as of June 30, 2026 and $5.9 million as of September 30, 2025. The increase from the prior quarter was caused by an increase in line of credit commitments, partially offset by a decrease in pipeline exposure.

Previous wording

Nonperforming assets consist of nonaccrual loans, loans over 90 days past due and still accruing, troubled loan modifications, OREO and nonperforming securities. Loans are generally placed on nonaccrual when principal or interest payments become 90 days past due, unless the loan is well secured and in the process of collection. Loans may also be placed on nonaccrual when circumstances indicate that the borrower may be unable to meet the contractual principal or interest payments. The threshold for evaluating commercial loans risk graded substandard or doubtful, and nonperforming loans specifically evaluated for individual credit loss is $1.0 million. OREO represents property acquired through foreclosure and is valued at the lower of the carrying amount or fair value, less any estimated disposal costs.

Current wording

Nonperforming assets consist of nonaccrual loans, loans over 90 days past due and still accruing, nonaccrual troubled loan modifications, OREO and nonperforming securities. Loans are generally placed on nonaccrual when principal or interest payments become 90 days past due, unless the loan is well secured and in the process of collection. Loans may also be placed on nonaccrual when circumstances indicate that the borrower may be unable to meet the contractual principal or interest payments. The threshold for evaluating commercial loans risk graded substandard or doubtful, and nonperforming loans specifically evaluated for individual credit loss is $1.0 million. OREO represents property acquired through foreclosure and is valued at the lower of the carrying amount or fair value, less any estimated disposal costs.

Previous wording

Total nonperforming assets were $65.3 million at June 30, 2026, compared to $52.1 million at December 31, 2025 and $46.7 million at June 30, 2025. Nonperforming loans at June 30, 2026 were $65.3 million or 0.55% of total loans, compared with $51.7 million or 0.45% of total loans at December 31, 2025 and $46.4 million or 0.40% of total loans at June 30, 2025. The increase in nonperforming assets and nonperforming loans from the prior period was attributable to an increase in commercial nonaccrual loans, partially offset by a decrease in residential and consumer accruing loans past due over 90 days. The increase from June 30, 2025 is attributable to an increase in commercial nonaccrual loans. Total nonaccrual loans were $62.9 million or 0.53% of total loans at June 30, 2026, compared to $44.6 million or 0.38% of total loans at December 31, 2025 and $43.2 million or 0.37% of total loans at June 30, 2025. Past due loans as a percentage of total loans was 0.63% at June 30, 2026, up from 0.38% at December 31, 2025 and up from 0.38% at June 30, 2025.

Current wording

Total nonperforming assets were $70.3 million at September 30, 2026, compared to $52.1 million at December 31, 2025 and $53.7 million at September 30, 2025. Nonperforming loans at September 30, 2026 were $70.0 million or 0.59% of total loans, compared with $51.7 million or 0.45% of total loans at December 31, 2025 and $53.4 million or 0.46% of total loans at September 30, 2025. The increase in nonperforming assets and nonperforming loans from the prior quarter was attributable to an increase in commercial nonaccrual loans and an increase in residential and consumer accruing loans past due over 90 days. The increase from September 30, 2025 is attributable to an increase in commercial nonaccrual loans. Total nonaccrual loans were $65.5 million or 0.55% of total loans at September 30, 2026, compared to $44.6 million or 0.38% of total loans at December 31, 2025 and $46.5 million or 0.40% of total loans at September 30, 2025. Past due loans as a percentage of total loans was 0.35% at September 30, 2026, slightly down from 0.38% at December 31, 2025 and September 30, 2025.

Previous wording

In addition to nonperforming loans discussed above, the Company has also identified approximately $228.7 million in potential problem loans at June 30, 2026 as compared to $271.8 million at December 31, 2025. Potential problem loans are loans that are currently performing, with a possibility of loss if weaknesses are not corrected. Such loans may need to be disclosed as nonperforming at some time in the future. Potential problem loans are classified by the Company’s loan rating system as “substandard.” The decrease in potential problem loans from December 31, 2025 is primarily due to the net migration of $26.0 million in commercial loan balances to pass status, due to improved borrower performance and an increase in commercial nonaccrual loan balances. Management cannot predict the extent to which economic conditions may worsen or other factors, which may impact borrowers and the potential problem loans. Accordingly, there can be no assurance that other loans will not become over 90 days past due, be placed on nonaccrual, become troubled loan modifications or require increased allowance coverage and provision for loan losses. To mitigate this risk the Company maintains a diversified loan portfolio, has no significant concentration in any particular industry and originates loans primarily within its footprint.

Current wording

In addition to nonperforming loans discussed above, the Company has also identified approximately $203.8 million in potential problem loans at September 30, 2026 as compared to $271.8 million at December 31, 2025. Potential problem loans are loans that are currently performing, with a possibility of loss if weaknesses are not corrected. Such loans may need to be disclosed as nonperforming at some time in the future. Potential problem loans are classified by the Company’s loan rating system as “substandard.” The decrease in potential problem loans from December 31, 2025 is primarily due to the migration of commercial loan balances out of substandard. The reduction was driven by $49.3 million in net risk rating upgrades and migration of $19.9 million of commercial loans to nonaccrual status. Management cannot predict the extent to which economic conditions may worsen or other factors, which may impact borrowers and the potential problem loans. Accordingly, there can be no assurance that other loans will not become over 90 days past due, be placed on nonaccrual, become troubled loan modifications or require increased allowance coverage and provision for loan losses. To mitigate this risk the Company maintains a diversified loan portfolio, has no significant concentration in any particular industry and originates loans primarily within its footprint.

Previous wording

Total deposits were $13.54 billion at June 30, 2026, up $38.1 million, or 0.3%, from December 31, 2025. As of June 30, 2026, there were $25.0 million of brokered time deposits, down from $98.9 million as of December 31, 2025. Demand, interest-bearing checking, savings and money market deposits increased, partially offset by a decrease in time deposits. The Company continues to experience growth within consumer and municipal business lines. The Company’s composition of total deposits is diverse and granular with over 611,000 accounts with an average per account balance of $22,129 as of June 30, 2026. As of June 30, 2026 and December 31, 2025 the estimated amounts of uninsured deposits based on the same methodologies and assumptions used for the bank regulatory reporting were $5.82 billion and $5.86 billion, respectively. Total average deposits increased $1.35 billion, or 11.1%, from the same period last year.

Current wording

Total deposits were $13.59 billion at September 30, 2026, up $87.2 million, or 0.6%, from December 31, 2025. As of September 30, 2026, there were no brokered time deposits, down from $98.9 million as of December 31, 2025. Demand, interest-bearing checking, savings and money market deposits increased, partially offset by a decrease in time deposits. The Company continues to experience growth within commercial and municipal business lines. The Company’s composition of total deposits is diverse and granular with approximately 610,000 accounts with an average per account balance of $22,273 as of September 30, 2026. As of September 30, 2026 and December 31, 2025 the estimated amounts of uninsured deposits based on the same methodologies and assumptions used for the bank regulatory reporting were $6.02 billion and $5.86 billion, respectively. Total average deposits increased $887.6 million, or 7.0%, from the same period last year.

Previous wording

The Company’s borrowed funds consist of short-term borrowings and long-term debt. Short-term borrowings totaled $316.4 million at June 30, 2026 compared to $148.1 million at December 31, 2025. Long-term debt was $43.0 million at June 30, 2026 compared to $43.2 million at December 31, 2025.

Current wording

The Company’s borrowed funds consist of short-term borrowings and long-term debt. Short-term borrowings totaled $414.4 million at September 30, 2026 compared to $148.1 million at December 31, 2025. Long-term debt was $43.0 million at September 30, 2026 compared to $43.2 million at December 31, 2025.

Previous wording

Stockholders’ equity of $1.94 billion represented 11.99% of total assets at June 30, 2026 compared with $1.90 billion, or 11.85% of total assets, as of December 31, 2025. Stockholders’ equity increased $47.7 million from December 31, 2025 driven by net income generation of $104.2 million for the six months ended June 30, 2026, partially offset by dividends declared of $38.5 million, the repurchase of common stock of $14.0 million and a $6.5 million increase in accumulated other comprehensive loss reflecting the change in fair value securities available for sale.

Current wording

Stockholders’ equity of $1.94 billion represented 11.85% of total assets at September 30, 2026 compared with $1.90 billion, or 11.85% of total assets, as of December 31, 2025. Stockholders’ equity increased $46.3 million from December 31, 2025 driven by net income generation of $162.2 million for the nine months ended September 30, 2026, partially offset by dividends declared of $59.2 million, the repurchase of common stock of $15.0 million and a $44.6 million increase in accumulated other comprehensive loss reflecting the change in fair value securities available for sale.

Previous wording

The Company purchased 68,595 shares of its common stock during the three months ended June 30, 2026, for a total of $3.0 million at an average price of $43.96 per share under its previously announced stock repurchase program. Under its stock repurchase program, the Company may repurchase shares of its common stock from time to time to mitigate the potential dilutive effects of stock-based incentive plans and other potential uses of common stock for corporate purposes. As of June 30, 2026, there were 1,431,405 shares available for repurchase under this program authorized on October 27, 2025, which is set to expire on December 31, 2027.

Current wording

The Company purchased 20,118 shares of its common stock during the three months ended September 30, 2026, for a total of $1.0 million at an average price of $50.02 per share under its previously announced stock repurchase program. Under its stock repurchase program, the Company may repurchase shares of its common stock from time to time to mitigate the potential dilutive effects of stock-based incentive plans and other potential uses of common stock for corporate purposes. As of September 30, 2026, there were 1,411,287 shares available for repurchase under this program authorized on October 27, 2025, which is set to expire on December 31, 2027.

Previous wording

The Company anticipates that the trajectory of net interest income will continue to depend significantly on the timing and path of short to mid-term interest rates which are heavily driven by inflationary pressures, employment levels and FOMC monetary policy. In 2025, the FOMC shifted to an easing cycle, cutting the federal funds rate three times (September, October and December) by 25 bps each, bringing the target range down from 4.25-4.50% towards a more neutral stance of 3.50-3.75% as inflation pressures eased but growth softened. Actions included rate cuts, open market operations to manage liquidity, and adjustments to reinvestment policies for Treasury and mortgage-backed securities. The Fed remains committed to its 2% inflation target and maximum employment goals. The 2025 federal funds rate reductions and initial expectations for continued reductions in 2026 provided the catalyst for the Company to begin reducing deposit rates in late 2025 and early 2026. However, the onset of the Iran War in 2026 has contributed to higher interest rates and an expectation for an elevated yield curve in the near term. The Company continues to focus on managing deposit expense in an environment of still elevated short-term interest rates (compared to recent years) while maintaining lending spreads in an effort to allow new and repricing asset yields to remain above existing portfolio asset yields where possible.

Current wording

The Company anticipates that the trajectory of net interest income will continue to depend significantly on the timing and path of short to mid-term interest rates which are heavily driven by inflationary pressures, employment levels and FOMC monetary policy. In 2025, the FOMC shifted to an easing cycle, cutting the federal funds rate three times (September, October and December) by 25 bps each, bringing the target range down from 4.25-4.50% towards a more neutral stance of 3.50%-3.75% as inflation pressures eased but growth softened. Actions included rate cuts, open market operations to manage liquidity, and adjustments to reinvestment policies for Treasury and mortgage-backed securities. The Federal Reserve remains committed to its 2% inflation target and maximum employment goals. The 2025 federal funds rate reductions provided the catalyst for the Company to begin reducing deposit rates in late 2025 and early 2026. However, as inflation rates have continued to run above the Federal Reserve’s 2% inflation target, coupled with a relatively strong labor market, the Federal Reserve increased the target range by 25 bps to 3.75%-4.00% in September of 2026. This effectively ended the 2025-26 easing cycle and began a new tightening cycle. The Company continues to focus on managing deposit expense in an environment of elevated short-term interest rates while maintaining lending spreads in an effort to allow new and repricing asset yields to remain above existing portfolio asset yields where possible.

Previous wording

The primary liquidity measurement the Company utilizes is called “Basic Surplus,” which captures the adequacy of its access to reliable sources of cash relative to the stability of its funding mix of average liabilities. This approach recognizes the importance of balancing levels of cash flow liquidity from short and long-term securities with the availability of dependable borrowing sources, which can be accessed when necessary. At June 30, 2026, the Company’s Basic Surplus measurement was 17.1% of total assets, or $2.77 billion, as compared to the December 31, 2025 Basic Surplus of 18.7%, or $2.98 billion, and was above the Company’s minimum of 5% (calculated at $810.7 million and $799.8 million of period end total assets as June 30, 2026 and December 31, 2025, respectively) set forth in its liquidity policies.

Current wording

The primary liquidity measurement the Company utilizes is called “Basic Surplus,” which captures the adequacy of its access to reliable sources of cash relative to the stability of its funding mix of average liabilities. This approach recognizes the importance of balancing levels of cash flow liquidity from short and long-term securities with the availability of dependable borrowing sources, which can be accessed when necessary. At September 30, 2026, the Company’s Basic Surplus measurement was 19.3% of total assets, or $3.17 billion, as compared to the December 31, 2025 Basic Surplus of 18.7%, or $2.98 billion, and was above the Company’s minimum of 5% (calculated at $819.7 million and $799.8 million of period end total assets as September 30, 2026 and December 31, 2025, respectively) set forth in its liquidity policies.

Previous wording

At June 30, 2026 and December 31, 2025, FHLB advances outstanding totaled $199.9 million and $43.0 million, respectively. At June 30, 2026 and December 31, 2025, the Bank had $379.0 million and $353.0 million, respectively, of collateral encumbered by municipal letters of credit. The Bank is a member of the FHLB system and had additional borrowing capacity from the FHLB of approximately $1.94 billion at June 30, 2026 and $2.10 billion at December 31, 2025. In addition, unpledged securities could have been used to increase borrowing capacity at the FHLB by an additional $1.31 billion and $1.11 billion at June 30, 2026 and December 31, 2025, respectively, or used to collateralize other borrowings, such as repurchase agreements. The Company also has the ability to issue brokered time deposits and to borrow against established borrowing facilities with other banks (federal funds), which could provide additional liquidity of $2.60 billion at June 30, 2026 and $2.53 billion at December 31, 2025. In addition, the Bank has a “Borrower-in-Custody” program with the FRB with the addition of the ability to pledge automobile and residential solar loans as collateral. At June 30, 2026 and December 31, 2025, the Bank had the capacity to borrow $1.12 billion and $1.18 billion, respectively, from this program. The Company’s internal policies authorize borrowing up to 25% of assets. Under this policy, remaining available borrowing capacity totaled $3.79 billion at June 30, 2026 and $3.94 billion at December 31, 2025.

Current wording

At September 30, 2026 and December 31, 2025, FHLB advances outstanding totaled $313.9 million and $43.0 million, respectively. At September 30, 2026 and December 31, 2025, the Bank had $350.0 million and $353.0 million, respectively, of collateral encumbered by municipal letters of credit. The Bank is a member of the FHLB system and had additional borrowing capacity from the FHLB of approximately $2.48 billion at September 30, 2026 and $2.10 billion at December 31, 2025. In addition, unpledged securities could have been used to increase borrowing capacity at the FHLB by an additional $1.17 billion and $1.11 billion at September 30, 2026 and December 31, 2025, respectively, or used to collateralize other borrowings, such as repurchase agreements. The Company also has the ability to issue brokered time deposits and to borrow against established borrowing facilities with other banks (federal funds), which could provide additional liquidity of $2.68 billion at September 30, 2026 and $2.53 billion at December 31, 2025. In addition, the Bank has a “Borrower-in-Custody” program with the FRB with the addition of the ability to pledge automobile and residential solar loans as collateral. At September 30, 2026 and December 31, 2025, the Bank had the capacity to borrow $1.25 billion and $1.18 billion, respectively, from this program. The Company’s internal policies authorize borrowing up to 25% of assets. Under this policy, remaining available borrowing capacity totaled $3.76 billion at September 30, 2026 and $3.94 billion at December 31, 2025.

Previous wording

Certain restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends. The approval of the OCC is required to pay dividends when a bank fails to meet certain minimum regulatory capital standards or when such dividends are in excess of a subsidiary bank’s earnings retained in the current year plus retained net profits for the preceding two years as specified in applicable OCC regulations. At June 30, 2026 and December 31, 2025, approximately $110.0 million and $115.9 million, respectively, of the total stockholders’ equity of the Bank was available for payment of dividends to the Company without approval by the OCC. The Bank’s ability to pay dividends is also subject to the Bank being in compliance with regulatory capital requirements. The Bank is currently in compliance with these requirements. Under the State of Delaware General Corporation Law, the Company may declare and pay dividends either out of accumulated net retained earnings or capital surplus.

Current wording

Certain restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends. The approval of the OCC is required to pay dividends when a bank fails to meet certain minimum regulatory capital standards or when such dividends are in excess of a subsidiary bank’s earnings retained in the current year plus retained net profits for the preceding two years as specified in applicable OCC regulations. At September 30, 2026 and December 31, 2025, approximately $121.1 million and $115.9 million, respectively, of the total stockholders’ equity of the Bank was available for payment of dividends to the Company without approval by the OCC. The Bank’s ability to pay dividends is also subject to the Bank being in compliance with regulatory capital requirements. The Bank is currently in compliance with these requirements. Under the State of Delaware General Corporation Law, the Company may declare and pay dividends either out of accumulated net retained earnings or capital surplus.