Bank7 Corp.
For the period ended Sep 30, 2026. Filed Nov 9, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 9, 2026
BSVN$58.81+0.7%Stored close · as of Nov 9, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0001140361-26-032024
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-09.
0001140361-26-042788
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 98 previous paragraphs and 101 current paragraphs.
63 unchanged; 27 reworded; 11 added; 7 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 41 previous and 41 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Recent Developments
Current report
Acquisition of Century Financial Services Corporation
Current report
On November 1, 2026, we completed our acquisition of Century Financial Services Corporation (“Century”), the parent company of Century Bank, headquartered in Santa Fe, New Mexico, pursuant to the Agreement and Plan of Merger dated September 16, 2026. Century merged with and into the Company, with the Company as the surviving entity. The aggregate consideration to Century shareholders under the Merger Agreement consisted of $70.0 million in cash and 1,232,657 shares of our common stock, with cash paid in lieu of fractional shares and of shares otherwise issuable to non-accredited shareholders, and was valued at approximately $142.3 million based on the closing price of our common stock on October 30, 2026. Shares not yet issued will be issued upon receipt of the remaining shareholders’ letters of transmittal. The $7.25 million good-faith deposit we funded during the third quarter of 2026 was applied toward the cash consideration at closing. In addition, Century’s outstanding phantom stock units vested upon completion of the merger and will be settled in cash for approximately $5.2 million. In connection with the merger, the Company assumed Century’s junior subordinated debentures and subordinated notes with an aggregate principal balance of approximately $39.5 million. The acquisition extends our franchise into New Mexico and adds approximately $1.2 billion of deposits. Century Bank is expected to merge with and into the Bank on or about January 1, 2027.
Current report
Because the acquisition was completed after September 30, 2026, the financial condition and results of operations presented in this report do not include Century. Century’s results will be included in our consolidated results beginning November 1, 2026. The acquisition will be accounted for under the acquisition method of accounting, and the initial accounting for the business combination, including the fair values of the assets acquired and liabilities assumed, was incomplete as of the date of this report. We incurred acquisition-related expenses of $0.7 million and $1.0 million for the three and nine months ended September 30, 2026, respectively. See Notes 1 and 2 to the condensed consolidated financial statements.
Current report
For the three months ended September 30, 2026 compared to the three months ended September 30, 2025:
Current report
For the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025:
Current report
For the three months ended September 30, 2026 compared to the three months ended September 30, 2025:
Current report
For the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025:
Current report
Noninterest expense for the three months ended September 30, 2026 was $9.8 million compared to $10.4 million for the same period in 2025, a decrease of $0.6 million, or 5.7%. Accounting, marketing, and legal fees expense was $0.9 million for the three months ended September 30, 2026 compared to $0.2 million for the same period in 2025, an increase of $0.7 million, or 308.1%. The increase in accounting, marketing, and legal fees was primarily attributable to an increase in consulting and legal fees tied to the acquisition of Century Financial Services Corporation. Additionally, ‘Other expense’ decreased by $1.3 million, which was primarily driven by the disposition of the Company’s oil and gas assets during the second quarter of 2026.
Current report
On November 1, 2026, we paid approximately $63 million in cash for the Century acquisition, net of the $7.25 million good-faith deposit funded during the third quarter. We also assumed Century’s junior subordinated debentures and subordinated notes with an aggregate principal balance of approximately $39.5 million. The acquisition added approximately $1.2 billion of deposits.
Current report
The capital amounts and ratios presented below do not reflect the Century acquisition, which was completed on November 1, 2026. The shares of common stock issued in the acquisition will increase shareholders’ equity, while the goodwill and core deposit intangibles recorded in the acquisition will be deducted in calculating regulatory capital.
Removed paragraphs (7)
Previous report
Sale of Oil and Gas Assets
Previous report
During the second quarter of 2026, management successfully completed its objective to maximize the loan loss recovery related to an oil and gas loan. To refresh memories, in the fourth quarter of 2023, management expended $16.5 million to acquire certain oil and gas assets. Over the holding period, the Company received cash proceeds from oil and gas sales of $15.0 million, and when that is combined with the final second quarter sale proceeds of $5.2 million, the total cash recovery of $20.2 million exceeds the initial $16.5 million cash outlay by $3.7 million. Over the holding period from the fourth quarter of 2023 through the disposition in the second quarter of 2026, these assets generated cumulative pre-tax net income of approximately $3.7 million (which includes the $2.1 million non-cash loss on sale recognized in the second quarter), which we believe is the most directly comparable GAAP measure to the non-GAAP cash summary presented below.
Previous report
GAAP to Non-GAAP Reconciliation for Oil and Gas Assets (dollars in thousands):
Previous report
Net Cash Returned is a non-GAAP financial measure used by management to analyze the cash cycle of this specific investment. This measure has significant limitations and is not a substitute for results prepared in accordance with U.S. GAAP. It should not be considered in isolation or as an alternative to net income. This measure is reconciled from income before taxes by adding back only the non-cash expenses shown in the table above.
Previous report
For the second quarter of 2026 compared to the second quarter of 2025:
Previous report
For the six months ended June 30, 2026 compared to the six months ended June 30, 2025:
Previous report
There was no provision for credit losses for three and six months ended June 30, 2026 and June 30, 2025.
Reworded paragraphs (27)
Previous wording
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current wording
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Previous wording
We reported total loans of $1.60 billion asof June 30, 2026, an increase of $100.0 million, or 6.7%, from June 30, 2025. Total deposits were $1.64 billion as of June 30, 2026, an increase of $43.7 million, or 2.7%, from June 30, 2025.
Current wording
We reported total loans of $1.63 billion asof September 30, 2026, an increase of $98.7 million, or 6.4%, from September 30, 2025. Total deposits were $1.72 billion as of September 30, 2026, an increase of $84.2 million, or 5.1%, from September 30, 2025.
Previous wording
Income before taxes was $11.0 million, a decrease of $3.7 million, or 25.1%, for the three months ended June 30, 2026 as compared to income before taxes of $14.7 million for the same periodin 2025. Income before taxes was $26.8 million, a decrease of $1.6 million, or 5.6%, for the six months ended June 30, 2026 as compared to income before taxes of $28.4 million for the same periodin 2025.
Current wording
Income before taxes was $13.6 million, a decrease of $0.6 million, or 4.0%, for the three months ended September 30, 2026 as compared to income before taxes of $14.2 million for the same periodin 2025. Income before taxes was $40.5 million, a decrease of $2.2 million, or 5.1%, for the nine months ended September 30, 2026 as compared to income before taxes of $42.6 million for the same periodin 2025.
Previous wording
Pre-tax return on average assets and return on average equity was 2.37% and 16.76%, respectively for the three months ended June 30, 2026, as compared to 3.27% and 25.99%, respectively, for the same periodin 2025. Pre-tax return on average assets and return on average equity was 2.87% and 20.83%, respectively for the six months ended June 30, 2026, as compared to 3.24% and 25.74%, respectively, for the same periodin 2025. Our efficiency ratio for the three months ended June 30, 2026 was 52.05% as compared to 39.95% for the same period in 2025. Our efficiency ratio for the six months ended June 30, 2026 was 45.18% as compared to 39.44% for the same period in 2025. The increases in the efficiency ratios for the 2026 periods were primarily driven by the disposition of the Company’s oil and gas assets in the second quarter, which resulted in a $2.1 million pre-tax loss recorded in noninterest expense and a corresponding reduction in oil and gas related noninterest income.
Current wording
Pre-tax return on average assets and pre-tax return on average equity were 2.85% and 19.91%, respectively for the three months ended September 30, 2026, as compared to 3.05% and 23.69%, respectively, for the same periodin 2025. Pre-tax return on average assets and pre-tax return on average equity were 2.86% and 20.51%, respectively for the nine months ended September 30, 2026, as compared to 3.17% and 25.02%, respectively, for the same periodin 2025. Our efficiency ratio for the three months ended September 30, 2026 was 41.60% as compared to 41.12% for the same period in 2025. Our efficiency ratio for the nine months ended September 30, 2026 was 44.02% as compared to 39.94% for the same period in 2025. The increase in the efficiency ratio for the nine months ended September 30, 2026 was primarily driven by the disposition of the Company’s oil and gas assets in the second quarter, which resulted in a $2.1 million pre-tax loss recorded in noninterest expense and a corresponding reduction in oil and gas related noninterest income.
Previous wording
For the three and six months ended June 30, 2026, and 2025, all of our income before income taxes was generated from domestic operations. We do not currently have exposure to foreign tax jurisdictions; as such, our jurisdictional tax mix remains concentrated within the United States and specific state jurisdictions, primarily Oklahoma.
Current wording
For the three and nine months ended September 30, 2026, and 2025, all of our income before income taxes was generated from domestic operations. We do not currently have exposure to foreign tax jurisdictions; as such, our jurisdictional tax mix remains concentrated within the United States and specific state jurisdictions, primarily Oklahoma.
Previous wording
Our provision for income taxes was $2.7 million for the three months ended June 30, 2026, compared to $3.6 million for same period in 2025. This resulted in an effective tax rate of 24.23% in 2026, compared to 24.49% in 2025. The effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to the effect of state income taxes (net of federal benefit) and nondeductible expenses. The year-over-year rate change was primarily driven by the impact of Oklahoma state taxes and certain nondeductible reconciling items. Cash taxes paid for the three months ended June 30, 2026 and 2025 totaled $6.1 million and $7.2 million, respectively, reflecting our domestic jurisdictional profile and the timing of estimated tax payments.
Current wording
Our provision for income taxes was $3.4 million for the three months ended September 30, 2026, compared to $3.3 million for same period in 2025. This resulted in an effective tax rate of 25.06% in 2026, compared to 23.56% in 2025. The effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to the effect of state income taxes (net of federal benefit) and nondeductible expenses. The year-over-year rate change was primarily driven by the impact of Oklahoma state taxes and certain nondeductible reconciling items. Cash taxes paid for the three months ended September 30, 2026 and 2025 totaled $3.8 million and $3.2 million, respectively, reflecting our domestic jurisdictional profile and the timing of estimated tax payments.
Previous wording
Our provision for income taxes was $6.5 million for the six months ended June 30, 2026, compared to $7.0 million for the same period in 2025. This resulted in an effective tax rate of 24.16% in 2026, compared to 24.56% in 2025. The effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to the effect of state income taxes (net of federal benefit) and nondeductible expenses. The year-over-year rate change was primarily driven by the impact of Oklahoma state taxes and certain nondeductible reconciling items. Cash taxes paid for the six months ended June 30, 2026 and 2025 totaled $6.1 million and $7.2 million, respectively, reflecting our domestic jurisdictional profile and the timing of estimated tax payments.
Current wording
Our provision for income taxes was $9.9 million for the nine months ended September 30, 2026, compared to $10.3 million for the same period in 2025. This resulted in an effective tax rate of 24.46% in 2026, compared to 24.23% in 2025. The effective tax rate differs from the U.S. federal statutory rate of 21% primarily due to the effect of state income taxes (net of federal benefit) and nondeductible expenses. The year-over-year rate change was primarily driven by the impact of Oklahoma state taxes and certain nondeductible reconciling items. Cash taxes paid for the nine months ended September 30, 2026 and 2025 totaled $9.9 million and $10.4 million, respectively, reflecting our domestic jurisdictional profile and the timing of estimated tax payments.
Previous wording
Noninterest income for the three months ended June 30, 2026 was $1.0 million compared to $2.7 million for the same period in 2025, a decrease of $1.7 million, or 62.9%. The decrease was primarily driven by a $1.6 million decline in ‘Other income and fees’, which was attributable to the absence of oil and gas related revenues during the second quarter of 2026 following the disposition of the Company’s oil and gas assets. For comparison, the Company recognized $1.6 million of oil and gas related revenues during the same period in 2025.
Current wording
Noninterest income for the three months ended September 30, 2026 was $1.1 million compared to $2.2 million for the same period in 2025, a decrease of $1.1 million, or 51.6%. The decrease was primarily driven by a $1.2 million decline in ‘Other income and fees’, which was attributable to the absence of oil and gas related revenues during the third quarter of 2026 following the disposition of the Company’s oil and gas assets. For comparison, the Company recognized $1.3 million of oil and gas related revenues during the same period in 2025.
Previous wording
Noninterest income for the six months ended June 30, 2026 was $3.0 million compared to $4.5 million for the same period in 2025, a decrease of $1.5 million, or 33.4%. The decrease was primarily driven by a $1.7 million decline in ‘Other income and fees’, which was largely attributable to a reduction in oil and gas related revenues following the disposition of the Company’s oil and gas assets early in the second quarter of 2026. The Company recognized $0.9 million of oil and gas related revenues during the six months ended June 30, 2026, compared to $2.7 million for the same period in 2025.
Current wording
Noninterest income for the nine months ended September 30, 2026 was $4.0 million compared to $6.7 million for the same period in 2025, a decrease of $2.6 million, or 39.4%. The decrease was primarily driven by a $3.0 million decline in ‘Other income and fees’, which was largely attributable to a reduction in oil and gas related revenues following the disposition of the Company’s oil and gas assets early in the second quarter of 2026. The Company recognized $0.9 million of oil and gas related revenues during the nine months ended September 30, 2026, compared to $4.0 million for the same period in 2025.
Previous wording
Noninterest expense for the three months ended June 30, 2026 was $11.9 million compared to $9.7 million for the same period in 2025, an increase of $2.2 million, or 22.2%. Salaries and employee benefits expense was $6.2 million for the three months ended June 30, 2026 compared to $5.7 million for the same period in 2025, an increase of $0.5 million, or 8.3%. The increase in salaries and employee benefits was primarily attributable to overall increases in compensation tied to Company performance and efforts to effectively compete for executive and non-executive talent. Additionally, ‘Other expense’ increased by $1.4 million, which was primarily driven by a $2.1 million pre-tax loss recognized on the disposition of the Company’s oil and gas assets during the second quarter of 2026.
Current wording
Noninterest expense for the nine months ended September 30, 2026 was $32.0 million compared to $29.0 million for the same period in 2025, an increase of $3.0 million, or 10.4%. Salaries and employee benefits expense was $18.3 million for the nine months ended September 30, 2026 compared to $16.8 million for the same period in 2025, an increase of $1.4 million, or 8.5%. The increase in salaries and employee benefits was primarily attributable to overall increases in compensation related to Company performance and efforts to effectively compete for executive and non-executive talent. Additionally, accounting, marketing, and legal fees increased by $1.4 million, which was primarily attributable to an increase in consulting and legal fees tied to the acquisition of Century Financial Services Corporation.
Previous wording
Total assets decreased $49.3 million, or 2.5%, to $1.91 billion as of June 30, 2026, compared to $1.96 billion as of December 31, 2025.
Current wording
Total assets increased $43.3 million, or 2.2%, to $2.01 billion as of September 30, 2026, compared to $1.96 billion as of December 31, 2025.
Previous wording
Our loans represent the largest portion of our earning assets. The quality and diversification of the loan portfolio is an important consideration when reviewing our financial condition. As of June 30, 2026, and December 31, 2025, our gross loans were $1.60 billionand $1.61 billion, respectively.
Current wording
Our loans represent the largest portion of our earning assets. The quality and diversification of the loan portfolio is an important consideration when reviewing our financial condition. As of September 30, 2026, and December 31, 2025, our gross loans were $1.64 billion and $1.61 billion, respectively.
Previous wording
The allowance is based on management’s estimate of probable losses in the loan portfolio. In the opinion of management, the allowance is adequate to absorb estimated losses in the portfolio as of each balance sheet date. While management uses available information to analyze losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance. In analyzing the adequacy of the allowance, a comprehensive loan grading system to determine risk potential in loans is utilized together with the results of internal credit reviews.
Current wording
The allowance is based on management’s estimate of expected credit losses in the loan portfolio. In the opinion of management, the allowance is adequate to absorb estimated losses in the portfolio as of each balance sheet date. While management uses available information to analyze losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance. In analyzing the adequacy of the allowance, a comprehensive loan grading system to determine risk potential in loans is utilized together with the results of internal credit reviews.
Previous wording
To determine the adequacy of the allowance, the loan portfolio is broken into segments based on loan type. Historical loss experience factors by segment, adjusted for changes in trends and conditions, are used to determine an indicated allowance for each portfolio segment. These factors are evaluated and updated based on the composition of the specific loan segment. Other considerations include volumes and trends of delinquencies, nonaccrual loans, levels of bankruptcies, criticized and classified loan trends, expected losses on real estate secured loans, new credit products and policies, economic conditions, concentrations of credit risk and the experience and abilities of our lending personnel. In addition to the segment evaluations, impaired substandard loans with a balance of $250,000 or more are individually evaluated based on facts and circumstances of the loan to determine if a specific allowance amount may be necessary. Specific allowances may also be established for loans whose outstanding balances are below the $250,000 threshold when it is determined that the risk associated with the loan differs significantly from the risk factor amounts established for its loan segment.
Current wording
To determine the adequacy of the allowance, the loan portfolio is broken into segments based on loan type. Historical loss experience factors by segment, adjusted for changes in trends and conditions, are used to determine an indicated allowance for each portfolio segment. These factors are evaluated and updated based on the composition of the specific loan segment. Other considerations include volumes and trends of delinquencies, nonaccrual loans, levels of bankruptcies, criticized and classified loan trends, expected losses on real estate secured loans, new credit products and policies, economic conditions, concentrations of credit risk and the experience and abilities of our lending personnel. In addition to the segment evaluations, substandard loans with a balance of $250,000 or more are individually evaluated based on facts and circumstances of the loan to determine if a specific allowance amount may be necessary. Specific allowances may also be established for loans whose outstanding balances are below the $250,000 threshold when it is determined that the risk associated with the loan differs significantly from the risk factor amounts established for its loan segment.
Previous wording
Theallowance was $19.5 million at June 30, 2026, compared to $19.4 million at December 31, 2025.
Current wording
Theallowance was $19.4 million at September 30, 2026, compared to $19.4 million at December 31, 2025.
Previous wording
Nonperforming loans include nonaccrual loans and loans past due 90 days or more and still accruing interest. Nonperforming assets consist of nonperforming loans plus OREO. Loans accounted for on a nonaccrual basis were $6.3 million as of June 30, 2026, and $6.5 million as of December 31, 2025. OREO was $464,000, and $461,000 as of June 30, 2026, and December 31, 2025, respectively.
Current wording
Nonperforming loans include nonaccrual loans and loans past due 90 days or more and still accruing interest. Nonperforming assets consist of nonperforming loans plus OREO. Loans accounted for on a nonaccrual basis were $7.4 million as of September 30, 2026, and $6.5 million as of December 31, 2025. OREO was $0, and $461,000 as of September 30, 2026, and December 31, 2025, respectively.
Previous wording
(1) Includes nonaccrual financial difficulty modifications of $1.1 and $0 million as of June 30, 2026 and December 31, 2025, respectively. See note 5 of the financial statements.
Current wording
(1) Includes nonaccrual financial difficulty modifications of $2.5 and $0 million as of September 30, 2026 and December 31, 2025, respectively. See note 5 of the financial statements.
Previous wording
(2)Excludes OREO of $464,000, and $461,000 as of June 30, 2026 and December 31, 2025, respectively, as the balances are not considered material for separate disclosure.
Current wording
(2) Excludes OREO of $0 and $461,000 as of September 30, 2026 and December 31, 2025, respectively, as the balances are not considered material for separate disclosure.
Previous wording
Of our interest-bearing deposits, some were obtained through brokered transactions. As of June 30, 2026 and December 31, 2025, brokered deposits were $135.2 million, and $205.6 million, respectively. Reciprocal deposits totaled $570.8 million and $576.5 million as of June 30, 2026 and December 31, 2025, respectively.
Current wording
Of our interest-bearing deposits, some were obtained through brokered transactions. As of September 30, 2026 and December 31, 2025, brokered deposits were $95.2 million, and $205.6 million, respectively. Reciprocal deposits totaled $698.3 million and $576.5 million as of September 30, 2026 and December 31, 2025, respectively.
Previous wording
Uninsured deposits are defined as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit and amounts in any other uninsured investment or deposit account that are classified as deposits and are not subject to any federal or state deposit insurance regimes. Total uninsured deposits were $389.0 million and $391.7 million as of June 30, 2026 and December 31, 2025, respectively, as calculated per regulatory guidance. These amounts were approximately 23.8% and 23.2% of deposits at June 30, 2026 and December 31, 2025, respectively.
Current wording
Uninsured deposits are defined as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit and amounts in any other uninsured investment or deposit account that are classified as deposits and are not subject to any federal or state deposit insurance regimes. Total uninsured deposits were $385.6 million and $391.7 million as of September 30, 2026 and December 31, 2025, respectively, as calculated per regulatory guidance. These amounts were approximately 22.4% and 23.2% of deposits at September 30, 2026 and December 31, 2025, respectively.
Previous wording
Total deposits as of June 30, 2026 and December 31, 2025 were $1.64 billion and $1.70 billion, respectively. The following table sets forth deposit balances by certain categories as of the dates indicated and the percentage of each deposit category to total deposits.
Current wording
Total deposits as of September 30, 2026 and December 31, 2025 were $1.72 billion and $1.70 billion, respectively. The following table sets forth deposit balances by certain categories as of the dates indicated and the percentage of each deposit category to total deposits.
Previous wording
As of June 30, 2026, we had no unsecured fed funds lines with correspondent depository institutions, with no amounts advanced. In addition, based on the values of loans pledged as collateral, we had borrowing availability with the FHLB of $225.6 million as of June 30, 2026 and $213.8 million as of December 31, 2025, and we had access toapproximately $305.2 million in liquidity with the Federal Reserve Bank as of June 30, 2026 and $288.6 million as of December 31, 2025.
Current wording
As of September 30, 2026, we had no unsecured fed funds lines with correspondent depository institutions, with no amounts advanced. In addition, based on the values of loans pledged as collateral, we had borrowing availability with the FHLB of $254.8 million as of September 30, 2026 and $213.8 million as of December 31, 2025, and we had access to approximately $263.7 million in liquidity with the Federal Reserve Bank as of September 30, 2026 and $288.6 million as of December 31, 2025.
Previous wording
As of June 30, 2026, the FDIC categorized the Bank as “well-capitalized” under the prompt corrective action frame work. There have been no conditions or events since June 30, 2026 that management believes would change this classification.
Current wording
As of September 30, 2026, the FDIC categorized the Bank as “well-capitalized” under the prompt corrective action framework. There have been no conditions or events since September 30, 2026 that management believes would change this classification.
Previous wording
Shareholders’ equity provides a source of permanent funding, allows for future growth and provides a cushion to withstand unforeseen adverse developments. Total shareholders’equity increased $15.3 million asof June 30,2026 to $266.3 million, compared to $251.0 million as of December 31, 2025.
Current wording
Shareholders’ equity provides a source of permanent funding, allows for future growth and provides a cushion to withstand unforeseen adverse developments. Total shareholders’ equity increased $22.7 million as of September 30, 2026 to $273.7 million, compared to $251.0 million as of December 31, 2025.
Previous wording
The following is a discussion of the critical accounting policies and significant estimates that we believe require us to make the most complex or subjective decisions or assessments. Additional information about these policies can be found in Note 1 of the Company’s consolidated financial statements included in the Annual Report on the Form 10-K.
Current wording
The following is a discussion of the critical accounting policies and significant estimates that we believe require us to make the most complex or subjective decisions or assessments. Additional information about these policies can be foundin Note 1 of the Company’s consolidated financial statements included in the Annual Report on the Form 10-K.
Previous wording
The allowance is based on management’s estimate of probable losses inherent in the loan portfolio. In the opinion of management, the allowance is adequate to absorb estimated losses in the portfolio as of each balance sheet date. While management uses available information to analyze losses on loans, future additions to the allowance may be necessary based on changes in economic conditions and changes in the composition of the loan portfolio. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance. In analyzing the adequacy of the allowance, a comprehensive loan grading system to determine risk potential in loans is utilized together with the results of internal credit reviews.
Current wording
The allowance for credit losses represents management’s estimate of expected credit losses over the contractual lives of financial assets measured at amortized cost. In the opinion of management, the allowance is adequate to absorb estimated losses in the portfolio as of each balance sheet date. While management uses available information to analyze losses on loans, future additions to the allowance may be necessary based on changes in economic conditions and changes in the composition of the loan portfolio. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance. In analyzing the adequacy of the allowance, a comprehensive loan grading system to determine risk potential in loans is utilized together with the results of internal credit reviews.
Previous wording
To estimate the allowance for credit losses, the loan portfolio is segmented based on shared risk characteristics, primarily by loan type. Historical credit loss experience for each segment, adjusted for relevant current conditions and reasonable and supportable forecasts, is a significant input in determining the expected credit losses for each portfolio segment under the current expected credit loss methodology. These historical loss factors and adjustments are regularly evaluated and updated based on the evolving composition of each loan segment. Other considerations in our current expected credit loss estimation process include current volumes and trends of delinquencies, nonaccrual loans, levels of bankruptcies, trends in criticized and classified loans, expected losses on real estate secured loans, impact of new credit products and policies, current and forecasted economic conditions, concentrations of credit risk, and the experience and abilities of our lending personnel in the current environment. In addition to these segment-level estimations, loans with larger balances or unique risk profiles may be further analyzed based on specific facts and circumstances to refine the overall expected credit loss estimate. This individual analysis helps ensure the allowance for credit losses appropriately reflects the expected losses inherent in the portfolio. Adjustments to the segment-level or portfolio-level expected credit loss estimates may be necessary when specific loan characteristics warrant a different loss expectation than indicated by the segment risk factors.
Current wording
To estimate the allowance for credit losses, the loan portfolio is segmented based on shared risk characteristics, primarily by loan type. Historical credit loss experience for each segment, adjusted for relevant current conditions and reasonable and supportable forecasts, is a significant input in determining the expected credit losses for each portfolio segment under the current expected credit loss methodology. These historical loss factors and adjustments are regularly evaluated and updated based on the evolving composition of each loan segment. Other considerations in our current expected credit loss estimation process include current volumes and trends of delinquencies, nonaccrual loans, levels of bankruptcies, trends in criticized and classified loans, expected losses on real estate secured loans, impact of new credit products and policies, current and forecasted economic conditions, concentrations of credit risk, and the experience and abilities of our lending personnel in the current environment. In addition to these segment-level estimations, loans with larger balances or unique risk profiles may be further analyzed based on specific facts and circumstances to refine the overall expected credit loss estimate. This individual analysis helps ensure the allowance for credit losses appropriately reflects the expected credit losses in the portfolio. Adjustments to the segment-level or portfolio-level expected credit loss estimates may be necessary when specific loan characteristics warrant a different loss expectation than indicated by the segment risk factors.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Noninterest expense for the six months ended June 30, 2026 was $22.2 million compared to $18.6 million for the same period in 2025, an increase of $3.6 million, or 19.4%. Salaries and employee benefits expense was $12.5 million for the six months ended June 30, 2026 compared to $11.0 million for the same period in 2025, an increase of $1.5 million, or 13.9%. The increase in salaries and employee benefits was primarily attributable to overall increases in compensation tied to Company performance and efforts to effectively compete for executive and non-executive talent. Additionally, ‘Other expense’ increased by $0.9 million, which was primarily driven by a $2.1 million pre-tax loss recognized on the disposition of the Company’s oil and gas assets during the second quarter of 2026.