UMB FINANCIAL CORP

Previous wording

Weak or deteriorating economic conditions, geopolitical events, more liberal origination or underwriting standards, or financial or systemic shocks could increase the Company’s credit risk and adversely affect its lending or other banking businesses and the value of its loans or investment securities. The Company’s business and results of operations depend significantly on general economic conditions. When those conditions are weak or deteriorating in any of the markets or regions where the Company operates, or there are impacts stemming from geopolitical events, its business or performance could be adversely affected. The Company provides financial services primarily throughout the Midwestern and Southwestern regions of the United States. As the Company does not have a significant banking presence in other parts of the country, a prolonged economic downturn in these markets could have a material adverse effect on the Company’s financial condition and results of operations. The Company’s lending and other banking businesses, in particular, are susceptible to weak or deteriorating economic conditions, including due to inflation, which could result in reduced loan demand or utilization rates and at the same time increased delinquencies or defaults. These kinds of conditions also could dampen the demand for products and other services in the Company’s investment-management, asset-servicing, insurance, brokerage, or related businesses. Financial markets and global supply chains may be adversely affected by the impact of military conflict, including the current conflicts in Ukraine and the Middle East, terrorism or other geopolitical events. Increased delinquencies or defaults could result as well from the Company adopting—for strategic, competitive, or other reasons—more liberal origination or underwriting standards for extensions of credit or other dealings with its customers or counterparties. Further, changes to U.S. global policy, including as it relates to tariffs, trade disputes and renewing trade agreements with various countries, could affect the Company’s results of operations. The global economy, the strength of the U.S. dollar, international trade conditions, and oil prices may ultimately affect interest rates, business import/export activity, capital expenditures by businesses, and investor confidence. Unfavorable changes in those factors may result in declines in consumer credit usage, increased delinquencies and defaults, and reduced loan demand. If delinquencies or defaults on the Company’s loans or investment securities increase, their value and the income derived from them could be adversely affected, and the Company could incur administrative and other costs in seeking a recovery on its claims and any collateral. Weak or deteriorating economic conditions also may negatively impact the market value and liquidity of the Company’s investment securities, and the Company may be required to record additional impairment charges if investme…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Weak or deteriorating economic conditions, geopolitical events, more liberal origination or underwriting standards, or financial or systemic shocks could increase the Company’s credit risk and adversely affect its lending or other banking businesses and the value of its loans or investment securities. The Company’s business and results of operations depend significantly on general economic conditions. When those conditions are weak or deteriorating in any of the markets or regions where the Company operates, or there are impacts stemming from geopolitical events, its business or performance could be adversely affected. The Company provides financial services primarily throughout the Midwestern, Southwestern, and Western regions of the United States. As the Company does not have a significant banking presence in other parts of the country, a prolonged economic downturn in these markets could have a material adverse effect on the Company’s financial condition and results of operations. The Company’s lending and other banking businesses, in particular, are susceptible to weak or deteriorating economic conditions, including due to inflation, which could result in reduced loan demand or utilization rates and at the same time increased delinquencies or defaults. These kinds of conditions also could dampen the demand for products and other services in the Company’s investment-management, asset-servicing, insurance, brokerage, or related businesses. Financial markets and global supply chains may be adversely affected by the impact of military conflict, including the current conflicts in Ukraine and the Middle East, terrorism, or other geopolitical events, including in Venezuela. Increased delinquencies or defaults could result as well from the Company adopting—for strategic, competitive, or other reasons—more liberal origination or underwriting standards for extensions of credit or other dealings with its customers or counterparties. Further, changes to U.S. global policy, including as it relates to tariffs, trade disputes and renewing or changing trade agreements with various countries, could affect the Company’s results of operations. The global economy, the strength of the U.S. dollar, international trade conditions, and oil prices may ultimately affect interest rates, business import/export activity, capital expenditures by businesses, and investor confidence. Unfavorable changes in those factors may result in declines in consumer credit usage, increased delinquencies and defaults, and reduced loan demand. If delinquencies or defaults on the Company’s loans or investment securities increase, their value and the income derived from them could be adversely affected, and the Company could incur administrative and other costs in seeking a recovery on its claims and any collateral. Weak or deteriorating economic conditions also may negatively impact the market value and liquidity of the Company’s investment securities, and the Company may be required to r…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

A meaningful part of the Company’s loan portfolio is secured by real estate and, as a result, could be negatively impacted by deteriorating or volatile real estate markets, the economic environment or associated environmental liabilities. At December 31, 2024, 51.9% of the Company’s aggregate loan portfolio—comprised of commercial real estate loans (representing 39.5% of the aggregate loan portfolio) and consumer real estate loans (representing 12.4% of the aggregate loan portfolio)—was primarily secured by interests in real estate located in the States where the Company operates. Other credit extended by the Company may be secured in part by real estate as well. Real estate values in the markets where this collateral is located may be different from, and in some instances worse than, real estate values in other markets or in the United States as a whole and may be affected by general economic conditions and a variety of other factors outside of the control of the Company or its customers. Any deterioration or volatility in these real estate markets could result in increased delinquencies or defaults, could adversely affect the value of the loans and the income to be derived from them, could give rise to unreimbursed recovery costs, and could reduce the demand for new or additional credit and related banking products and other services, all to the detriment of the Company’s business and performance. In recent years, commercial real estate markets have been particularly impacted by the economic and other disruptions resulting from the COVID-19 pandemic and its aftermath. Repayment of commercial real estate, which typically involves higher loan principal amounts as compared to consumer real estate lending, is often dependent on the successful operation of the business conducted on the property securing the loans. Negative shifts in economic conditions can impact the borrower’s ability to pay. Failures in the Company’s risk management policies, procedures and controls could adversely affect its ability to manage this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which could negatively impact the Company’s operating and financial performance. In addition, if hazardous or toxic substances were found on any real estate that the Company acquires in foreclosure or otherwise, the Company may incur substantial liability for compliance and remediation costs, personal injury, or property damage.

Current wording

A meaningful part of the Company’s loan portfolio is secured by real estate and, as a result, could be negatively impacted by deteriorating or volatile real estate markets, the economic environment or associated environmental liabilities. At December 31, 2025, 53.7% of the Company’s aggregate loan portfolio—comprised of commercial real estate loans (representing 42.2% of the aggregate loan portfolio) and consumer real estate loans (representing 11.4% of the aggregate loan portfolio)—was primarily secured by interests in real estate located in the States where the Company operates. Other credit extended by the Company may be secured in part by real estate as well. Real estate values in the markets where this collateral is located may be different from, and in some instances worse than, real estate values in other markets or in the United States as a whole and may be affected by general economic conditions and a variety of other factors outside of the control of the Company or its customers. Any deterioration or volatility in these real estate markets could result in increased delinquencies or defaults, could adversely affect the value of the loans and the income to be derived from them, could give rise to unreimbursed recovery costs, and could reduce the demand for new or additional credit and related banking products and other services, all to the detriment of the Company’s business and performance. In recent years, commercial real estate markets have been particularly impacted by the economic and other disruptions resulting from the COVID-19 pandemic and its aftermath. Repayment of commercial real estate, which typically involves higher loan principal amounts as compared to consumer real estate lending, is often dependent on the successful operation of the business conducted on the property securing the loans. Negative shifts in economic conditions can impact the borrower’s ability to pay. Failures in the Company’s risk management policies, procedures and controls could adversely affect its ability to manage this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which could negatively impact the Company’s operating and financial performance. In addition, if hazardous or toxic substances were found on any real estate that the Company acquires in foreclosure or otherwise, the Company may incur substantial liability for compliance and remediation costs, personal injury, or property damage.

Previous wording

Challenging business, economic, or market conditions could adversely affect the Company’s fee-based banking, investment-management, asset-servicing, or other businesses. The Company’s fee-based banking, investment-management, asset-servicing, and other businesses are driven by wealth creation in the economy, robust market activity, monetary and fiscal stability, and positive investor, business, and consumer sentiment. Economic downturns, market disruptions, high unemployment or underemployment, unsustainable debt levels, depressed real estate markets, industry consolidations, or other challenging business, economic, or market conditions could adversely affect these businesses and their results. If the funds or other groups that are clients of UMBFS were to encounter similar difficulties, UMBFS’s revenue could suffer. The Company’s bank-card revenue is driven primarily by transaction volumes in business, healthcare, and consumer spending that generate interchange fees, and any of these conditions could dampen those volumes. Economic conditions can also reduce the usage of credit cards in general and the average purchase amount of transactions, which reduces interest income and transaction fees. Other fee-based banking businesses that could be adversely affected include trading, asset management, custody, trust, and cash and treasury management. In addition, legislative and regulatory changes could reduce the amounts and types of fees financial institutions may charge, including the FRB’s Regulation II on debit card interchange fees and the CFPB’s regulations on consumer protection, such as the CFPB late fee regulation.

Current wording

Challenging business, economic, or market conditions could adversely affect the Company’s fee-based banking, investment-management, asset-servicing, or other businesses. The Company’s fee-based banking, investment-management, asset-servicing, and other businesses are driven by wealth creation in the economy, robust market activity, monetary and fiscal stability, and positive investor, business, and consumer sentiment. Economic downturns, market disruptions, high unemployment or underemployment, unsustainable debt levels, depressed real estate markets, industry consolidations, or other challenging business, economic, or market conditions could adversely affect these businesses and their results. If the funds or other groups that are clients of UMBFS were to encounter similar difficulties, UMBFS’s revenue could suffer. The Company’s bank-card revenue is driven primarily by transaction volumes in business, healthcare, and consumer spending that generate interchange fees, and any of these conditions could dampen those volumes. Economic or market conditions, such as increased use of digital currencies and cryptocurrencies (including stablecoin) can also reduce the usage of credit cards in general and the average purchase amount of transactions, which reduces interest income and transaction fees. Other fee-based banking businesses that could be adversely affected include trading, asset management, custody, trust, and cash and treasury management. In addition, legislative and regulatory changes could reduce the amounts and types of fees financial institutions may charge, including the FRB’s Regulation II on debit card interchange fees and potential legislation imposing a cap on credit card interest rates.

Previous wording

To the extent that the Company continues to maintain a sizeable portfolio of investment securities, its income may be adversely affected and its reported equity more volatile, and the portfolio values may be adversely impacted by deterioration in the credit quality of underlying collateral within the various categories of investment securities it owns. As of December 31, 2024, the Company’s securities portfolio totaled approximately $13.7 billion, which represented approximately 27.1% of its total assets. Regulatory restrictions and the Company’s investment policies generally result in the acquisition of securities with lower yields than loans. For the year-ended December 31, 2024, the weighted average yield of the Company’s securities portfolio was 2.96% as compared to 6.66% for its loan portfolio. Accordingly, to the extent that the Company is unable to effectively deploy its funds to originate or acquire loans or other assets with higher yields than those of its investment securities, the Company’s income may be negatively impacted. Additionally, approximately $7.8 billion, or 56.9%, of the Company’s investment securities are classified as available for sale and reported at fair value. Unrealized gains or losses on these securities are excluded from earnings and reported in other comprehensive income, which in turn affects the Company’s reported equity. As a result, to the extent that the Company continues to maintain a significant portfolio of available-for-sale securities, its reported equity may experience greater volatility.

Current wording

To the extent that the Company continues to maintain a sizeable portfolio of investment securities, its income may be adversely affected and its reported equity more volatile, and the portfolio values may be adversely impacted by deterioration in the credit quality of underlying collateral within the various categories of investment securities it owns. As of December 31, 2025, the Company’s securities portfolio totaled approximately $20.1 billion, which represented approximately 27.5% of its total assets. Regulatory restrictions and the Company’s investment policies generally result in the acquisition of securities with lower yields than loans. For the year-ended December 31, 2025, the weighted average yield of the Company’s securities portfolio was 3.68% as compared to 6.70% for its loan portfolio. Accordingly, to the extent that the Company is unable to effectively deploy its funds to originate or acquire loans or other assets with higher yields than those of its investment securities, the Company’s income may be negatively impacted. Additionally, approximately $13.7 billion, or 68.1%, of the Company’s investment securities are classified as available for sale and reported at fair value. Unrealized gains or losses on these securities are excluded from earnings and reported in other comprehensive income, which in turn affects the Company’s reported equity. As a result, to the extent that the Company continues to maintain a significant portfolio of available-for-sale securities, its reported equity may experience greater volatility.

Previous wording

The Company believes that government scrutiny and the intensity of supervision of all financial-services companies has increased, fundamental changes have been made to the banking, securities, and other laws that govern financial services, and a host of related business practices have been reexamined and reshaped. The Company also may face further government scrutiny due to the increased size of the Company’s business resulting from the acquisition of HTLF. See risk below “The future results of the Company following the acquisition of HTLF may suffer if the Company does not effectively manage its expanded operations.” As a result, the Company expects to continue devoting increased time and resources to risk management, compliance, and regulatory change management. The legislative, regulatory, and supervisory environment is beyond the Company’s control, may change rapidly and unpredictably, and may negatively influence the Company’s revenue, costs, earnings, growth, liquidity and capital levels. For example, the Company is unable to predict what, if any, changes to the regulatory environment may be enacted by Congress or a new presidential administration and what the impact of any changes will be on the Company. Risks also exist that government authorities could judge the Company’s business or other practices as unsafe, unsound, or otherwise unadvisable and bring formal or informal corrective or enforcement actions against it, including fines or other penalties and directives to change its products or other services. For example, the federal banking agencies regularly conduct examinations of the Company’s business. If, as a result of an examination, a banking agency were to determine that the financial condition, capital resources, asset quality, asset concentration, earning prospects, management, liquidity, sensitivity to market risk, consumer compliance, or other aspects of any of the Company’s operations has become unsatisfactory, or that the Company or the Company’s management is in violation of any law or regulation, it could take a number or different remedial actions as it deems appropriate. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in the Company’s capital, to restrict the Company’s growth, to change the asset composition of the Company’s portfolio or balance sheet, to assess civil money penalties against the Company’s officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate the Bank’s deposit insurance. For practical or other reasons, the Company may not be able to effectively defend itself against these actions, and they in turn could give rise to litigation by private plaintiffs. Further, if the …

Excerpt shortened here; the source contains the full paragraph.

Current wording

Regulatory scrutiny and the intensity of supervision of all financial-services companies is evolving, fundamental changes have been made to the banking, securities, and other laws that govern financial services, and a host of related business practices have been reexamined and reshaped in the relatively near term. The Company expects to continue devoting increased time and resources to risk management, compliance, and regulatory change management. The legislative, regulatory, and supervisory environment is beyond the Company’s control, may change rapidly and unpredictably, and may negatively influence the Company’s revenue, costs, earnings, growth, liquidity and capital levels. For example, the Company is unable to predict what, if any, changes to the regulatory environment may be enacted by Congress or the presidential administration and what the impact of any changes will be on the Company. Some of the regulations finalized in the prior administration that are applicable to financial institutions have been modified, rescinded or withdrawn or are subject to reevaluation, creating further uncertainty. It is possible the expected changes in regulation do not occur or are reversed by a subsequent administration, or the regulatory measures that are ultimately enacted deliver significant competitive advantages to financial services that are structured differently or serve different markets than the Company. Risks also exist that government authorities could judge the Company’s business or other practices as unsafe, unsound, or otherwise unadvisable and bring formal or informal corrective or enforcement actions against it, including fines or other penalties and directives to change its products or other services. For example, the federal banking agencies regularly conduct examinations of the Company’s business. If, as a result of an examination, a banking agency were to determine that the financial condition, capital resources, asset quality, asset concentration, earning prospects, management, liquidity, sensitivity to market risk, consumer compliance, or other aspects of any of the Company’s operations has become unsatisfactory, or that the Company or the Company’s management is in violation of any law or regulation, it could take a number or different remedial actions as it deems appropriate. These actions include the power to require the Company to cease and desist “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in the Company’s capital, to restrict the Company’s growth, to change the asset composition of the Company’s portfolio or balance sheet, to assess civil money penalties against the Company’s officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Regulatory or supervisory requirements, future growth, operating results, or strategic plans may prompt the Company to raise additional capital, but that capital may not be available at all or on favorable terms and, if raised, may be dilutive. The Company is subject to safety-and-soundness and capital-adequacy standards under applicable law, which are subject to change, and to the direct supervision of government authorities. See “Regulation and Supervision” in Part I, Item 1 of this report. If the Company is not satisfying or is at risk of not satisfying these standards or applicable supervisory requirements—whether due to inadequate operating results that erode capital, future growth that outpaces the accumulation of capital through earnings, or otherwise—the Company may be required to raise capital, restrict dividends, or limit originations of certain types of commercial and mortgage loans. If the Company is required to limit originations of certain types of commercial and mortgage loans, it would thereby reduce the amount of credit available to borrowers and limit opportunities to earn interest income from the loan portfolio. The Company also may be compelled to raise capital if regulatory or supervisory requirements change and as a result of the acquisition of HTLF may face further government scrutiny due to the increased size of the Company’s business. In addition, the Company may elect to raise capital for strategic reasons even when it is not required to do so.

Current wording

Regulatory or supervisory requirements, future growth, operating results, or strategic plans may prompt the Company to raise additional capital, but that capital may not be available at all or on favorable terms and, if raised, may be dilutive. The Company is subject to safety-and-soundness and capital-adequacy standards under applicable law, which are subject to change, and to the direct supervision of government authorities. See “Regulation and Supervision” in Part I, Item 1 of this report. If the Company is not satisfying or is at risk of not satisfying these standards or applicable supervisory requirements—whether due to inadequate operating results that erode capital, future growth that outpaces the accumulation of capital through earnings, or otherwise—the Company may be required to raise capital, restrict dividends, or limit originations of certain types of commercial and mortgage loans. If the Company is required to limit originations of certain types of commercial and mortgage loans, it would thereby reduce the amount of credit available to borrowers and limit opportunities to earn interest income from the loan portfolio. The Company also may be compelled to raise capital if regulatory or supervisory requirements change. In addition, the Company may elect to raise capital for strategic reasons even when it is not required to do so.

Previous wording

The Company is subject to complex and evolving laws, regulations, rules, standards and contractual obligations related to privacy, data protection and data security, which may increase the Company’s costs of doing business and liability exposure. The Company is subject to a variety of complex and continuously evolving and developing laws, regulations, rules, standards and contractual obligations regarding privacy, data protection and data security, including those related to the collection, storage, handling, use, disclosure, transfer, security and other processing of personal information. Compliance with such laws, regulations, rules, standards and contractual obligations may require the Company to incur significant compliance costs and/or require the Company to change its policies, procedures or operations, and failure to comply with such laws, regulations, rules, standards or contractual obligations could expose the Company to liability, including enforcement actions, fines, penalties and sanctions for non-compliance, governmental investigations and/or reputational damage, and of which could have a material adverse effect on the Company’s business, financial condition and results of operations.

Current wording

The Company is subject to complex and evolving laws, regulations, rules, standards and contractual obligations related to privacy, data protection/use and data security, which may increase the Company’s costs of doing business and liability exposure. The Company is subject to a variety of complex and continuously evolving and developing laws, regulations, rules, standards and contractual obligations regarding privacy, data protection/use and data security, including those related to the collection, storage, handling, use, disclosure, transfer, security, integration with artificial intelligence and other processing of personal information. Compliance with such laws, regulations, rules, standards and contractual obligations may require the Company to incur significant compliance costs and/or require the Company to change its policies, procedures or operations, and failure to comply with such laws, regulations, rules, standards or contractual obligations could expose the Company to liability, including enforcement actions, fines, penalties and sanctions for non-compliance, governmental investigations and/or reputational damage, and of which could have a material adverse effect on the Company’s business, financial condition and results of operations.

Previous wording

The Company’s business relies on systems, employees, service providers, and other third parties, and failures or errors by any of them or other operational risks associated with the Company’s reliance on third parties could adversely affect the Company. The Company relies on hosted and on-premises systems, employees, service providers, and other third parties to properly oversee, administer, and process a high volume of transactions and otherwise support the Company’s day-to-day operations. This gives rise to meaningful operational risk—including the risk of fraud by employees or outside parties, unauthorized access to the Company’s premises or systems, errors in processing, failures of technology, breaches of internal controls or compliance safeguards, malware and other security or hacking incidents, inadequate integration of acquisitions, human or software errors, design or performance issues, capacity constraints or unexpected transaction volumes, unavailability of systems and services, including due to electrical or telecommunications outages, bad weather, acts of terrorism or the like, and other breakdowns in business continuity plans or acts of misconduct.

Current wording

The Company’s business relies on systems, employees, service providers, and other third parties, and failures or errors by any of them or other operational risks associated with the Company’s reliance on third parties could adversely affect the Company. The Company relies on hosted and on-premises systems, employees, service providers, and other third parties to properly oversee, administer, and process a high volume of transactions and otherwise support the Company’s day-to-day operations. This gives rise to meaningful operational risk—including the risk of fraud by employees or outside parties, unauthorized access to the Company’s premises or systems, errors in processing, use of or integration with artificial intelligence, failures of technology, breaches of internal controls or compliance safeguards, malware and other security or hacking incidents, inadequate integration of acquisitions, human or software errors, design or performance issues, capacity constraints or unexpected transaction volumes, unavailability of systems and services, including due to electrical or telecommunications outages, bad weather, acts of terrorism or the like, and other breakdowns in business continuity plans or acts of misconduct.

Previous wording

The Company relies on the business infrastructure and technology systems of third parties (and their supply chains) with which it does business and/or to whom it outsources the operation, maintenance and development of its key information technology and communications systems as well as other key components of its business operations. If the Company or its service providers fail to architect, administer or oversee such infrastructure or systems in a well-managed, secure and effective manner, or if such infrastructure or systems become unavailable, are disrupted, fail to scale, do not operate as designed, or do not meet their service level agreements for any reason, the Company may experience unplanned service disruption or unforeseen costs which could result in material harm to the Company’s business and operations. The Company must successfully develop and maintain information, financial reporting, disclosure, privacy, data protection, data security and other controls adapted to the Company’s reliance on outside platforms and providers. The Company faces a risk that its third-party service providers might be unable or unwilling to continue to provide these or other services to meet its current or future needs in an efficient, cost-effective, or favorable manner or may terminate or seek to terminate their contractual relationships with the Company. In addition, service providers utilizing third-party technology or other intellectual property in connection with their provision of services may face allegations of misappropriation, misuse, infringement or other intellectual property rights violations, which could result in the Company losing access to such technology or services. Any transition to alternative third-party service providers or internal solutions may be difficult to implement, may cause the Company to incur significant time and expense and may disrupt or degrade the Company’s ability to deliver its products and services. Thus, the infrastructure and systems that are outsourced to third-party service providers may increase the Company’s risk exposure.

Current wording

The Company relies on the business infrastructure and technology systems of third parties (and their supply chains) with which it does business and/or to whom it outsources the operation, maintenance and development of its key information technology and communications systems as well as other key components of its business operations. If the Company or its service providers fail to architect, administer or oversee such infrastructure or systems in a well-managed, secure and effective manner, or if such infrastructure or systems become unavailable, are disrupted, fail to scale, do not operate as designed or expected, or do not meet their service level agreements for any reason, the Company may experience unplanned service disruption or unforeseen costs which could result in material harm to the Company’s business and operations. The Company must successfully develop and maintain information, financial reporting, disclosure, privacy, data protection, data security, artificial intelligence, and other controls adapted to the Company’s reliance on outside platforms and providers. The Company faces a risk that its third-party service providers might be unable or unwilling to continue to provide these or other services to meet its current or future needs in an efficient, cost-effective, or favorable manner or may terminate or seek to terminate their contractual relationships with the Company. In addition, service providers or solutions utilizing artificial intelligence are subject to uncertain and evolving laws and regulations, unique data, confidentiality and privacy risks, and the potential for unexpected operational results that are not insignificant. Despite reasonable efforts, the Company's risk management framework may not be sufficiently effective in managing the risk of artificial intelligence usage, which could result in significant operational, financial, legal and reputational risk for the Company. In addition, service providers utilizing third-party technology or other intellectual property in connection with their provision of services may face allegations of misappropriation, misuse, infringement or other intellectual property rights violations, which could result in the Company losing access to such technology or services. Any transition to alternative third-party service providers or internal solutions may be difficult to implement, may cause the Company to incur significant time and expense and may disrupt or degrade the Company’s ability to deliver its products and services. Thus, the infrastructure and systems that are outsourced to third-party service providers may increase the Company’s risk exposure.

Previous wording

The soundness of other financial institutions could adversely affect the Company. Adverse developments affecting the overall strength and soundness of other financial institutions, the financial services industry as a whole and the general economic climate and the U.S. Treasury market could have a negative impact on perceptions about the strength and soundness of the Company’s business even if the Company is not subject to the same adverse developments. In addition, adverse developments with respect to third parties with whom the Company has important relationships could also negatively impact perceptions about the Company. These perceptions about the Company could cause its business to be negatively affected and exacerbate the other risks that the Company faces.

Current wording

The soundness, and other real or perceived risks, of other financial institutions could adversely affect the Company. Adverse developments affecting the overall strength and soundness of other financial institutions, the financial services industry as a whole and the general economic climate and the U.S. Treasury market could have a negative impact on perceptions about the strength and soundness of the Company’s business even if the Company is not subject to the same adverse developments. In addition, adverse developments with respect to third parties with whom the Company has important relationships could also negatively impact perceptions about the Company. These perceptions about the Company could cause its business to be negatively affected and exacerbate the other risks that the Company faces.

Previous wording

The Company may be impacted by actual or perceived soundness of other financial institutions, including as a result of the financial or operational failure of a major financial institution, or concerns about the creditworthiness of such a financial institution or its ability to fulfill its obligations, which can cause substantial and cascading disruption within the financial markets and increased expenses, including FDIC insurance premiums, and could affect the Company’s ability to attract and retain depositors and to borrow or raise capital. For example, during 2023 the FDIC took control and was appointed receiver of Silicon Valley Bank, Signature Bank, and First Republic Bank. The failure of other banks and financial institutions and the measures taken by governments, businesses, and other organizations in response to those events could adversely impact the Company’s business, financial condition and results of operations.

Current wording

The Company may be impacted by actual or perceived soundness of other financial institutions, including as a result of the financial or operational failure of a major financial institution, or concerns about the creditworthiness of such a financial institution or its ability to fulfill its obligations, which can cause substantial and cascading disruption within the financial markets and increased expenses, including FDIC insurance premiums, and could affect the Company’s ability to attract and retain depositors and to borrow or raise capital. For example, during 2023 the FDIC took control and was appointed receiver of Silicon Valley Bank, Signature Bank, and First Republic Bank. In addition, there has been, and there may continue to be in the future, negative market impacts on many financial institutions in the industry for the perceived risks associated with extensions of credit to non-depository financial institutions, regardless of the actual risk for any particular financial institution. The failure or risks of other banks and financial institutions, and the measures taken by governments, businesses, and other organizations in response to those events, could adversely impact the Company’s business, financial condition and results of operations.

Previous wording

The Company faces intense competition from other financial-services and financial-services technology companies, and competitive pressures could adversely affect the Company’s business or performance. The Company faces intense competition in each of its business segments and in all of its markets and geographic regions, and the Company expects competitive pressures to intensify in the future—especially in light of recent legislative and regulatory initiatives, technological innovations that alter the barriers to entry, current economic and market conditions, and government monetary and fiscal policies. Competition with financial-services technology companies, or technology companies partnering with financial-services companies, may be particularly intense, due to, among other things, differing regulatory environments. See “Competition” in Part I, Item 1 of this report. Competitive pressures may drive the Company to take actions that the Company might otherwise eschew, such as lowering the interest rates or fees on loans or raising the interest rates on deposits in order to keep or attract high-quality customers. These pressures also may accelerate actions that the Company might otherwise elect to defer, such as substantial investments in technology or infrastructure. The Company has certain businesses that utilize wholesale models which can lead to customer concentrations for those businesses that, if negatively impacted by new entrants, competitive pressures, or consolidations, could affect the Company’s fee income. Whatever the reason, actions that the Company takes in response to competition may adversely affect its results of operations and financial condition. These consequences could be exacerbated if the Company is not successful in introducing new products and other services, achieving market acceptance of its products and other services, developing and maintaining a strong customer base, or prudently managing expenses. See risk below “The financial services industry is rapidly evolving and the Company may not be successful in introducing new products or services on a large scale in response to these changes.”

Current wording

Competitive pressures may drive the Company to take actions that the Company might otherwise eschew, such as lowering the interest rates or fees on loans or raising the interest rates on deposits in order to keep or attract high-quality customers. These pressures also may accelerate actions that the Company might otherwise elect to defer, such as substantial investments in technology or infrastructure. The Company has certain businesses that utilize wholesale models which can lead to customer concentrations for those businesses that, if negatively impacted by new entrants, competitive pressures, or consolidations, could affect the Company’s fee income. Whatever the reason, actions that the Company takes in response to competition may adversely affect its results of operations and financial condition. These consequences could be exacerbated if the Company is not successful in introducing new products and other services, achieving market acceptance of its products and other services, developing and maintaining a strong customer base, or prudently managing expenses. See risk below “The financial services industry is rapidly evolving and the Company may not be successful in introducing new products or services on a large scale in response to these changes.”

Previous wording

The Company may not be able to successfully integrate HTLF or to realize the anticipated benefits of the acquisition of HTLF. Following consummation of the acquisition of HTLF, the Company began the process of integrating HTLF. A successful integration of its business with the Company will depend substantially on the Company’s ability to consolidate operations, corporate cultures, systems and procedures and to eliminate redundancies and costs. The Company may not be able to combine its business with the business of HTLF without encountering difficulties that could adversely affect the ability to maintain relationships with existing clients, customers, depositors and employees, such as:

Current wording

The Company may not be able to realize the full anticipated benefits of the acquisition of HTLF. Following consummation of the acquisition of HTLF, the Company developed and implemented strategies to fully integrate with HTLF. The Company completed the conversion of systems and procedures during the fourth quarter of 2025. The ability to fully realize the remaining anticipated benefits of the acquisition is subject to the Company’s ability to support its consolidated operations, foster a cohesive corporate culture and further eliminate redundancies and costs. In doing so, the Company may encounter difficulties that could adversely affect the ability to maintain relationships with existing clients, customers, depositors and employees, such as:

Previous wording

additional costs or unexpected problems with operations, personnel, third-party service providers, technology and credit;

Current wording

unexpected issues with operations, personnel, third-party service providers, and credit; and/or

Previous wording

inconsistencies in standards, controls, procedures and policies; and/or

Current wording

inconsistent application of standards, controls, procedures and policies.

Previous wording

Any disruption to the businesses could cause customers to remove their accounts and move their business to a competing financial institution. Integration efforts between the two companies may also divert management attention and resources. Additionally, general market and economic conditions or governmental actions affecting the financial industry generally may inhibit our successful integration of HTLF.

Current wording

Disruption to the businesses resulting from the Company's continued efforts could cause customers, including depositors, to move their business to a competing financial institution.

Previous wording

Further, the Company acquired HTLF with the expectation that the acquisition will result in various benefits including, among other things, benefits relating to enhanced revenues, a strengthened market position for the combined company, cross selling opportunities, technological efficiencies, cost savings and operating efficiencies. Achieving the anticipated benefits of the acquisition of HTLF is subject to a number of uncertainties, including whether the Company integrates HTLF in an efficient, effective and timely manner, and general competitive factors in the marketplace. Failure to achieve these anticipated benefits on the anticipated timeframe, or at all, could result in a reduction in the price of the Company’s common stock as well as in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy and could materially and adversely affect the Company’s business, financial condition and operating results. Additionally, following consummation of the acquisition of HTLF, the Company made fair value estimates of certain assets and liabilities in recording the acquisition. Actual values of these assets and liabilities could differ from the estimates, which could impact regulatory capital ratios and result in the Company not achieving the anticipated benefits of the acquisition of HTLF. Finally, any cost savings that are realized may be offset by losses in revenues or other charges to earnings.

Current wording

Further, the Company acquired HTLF with the expectation that the acquisition will result in various benefits including, among other things, benefits relating to enhanced revenues, a strengthened market position for the combined company, cross selling opportunities, technological efficiencies, cost savings and operating efficiencies. Achieving the anticipated benefits of the acquisition of HTLF remains subject to a number of uncertainties, including general competitive factors in the marketplace. Failure to achieve these anticipated benefits on the anticipated timeframe, or at all, could result in a reduction in the price of the Company’s common stock as well as in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy and could materially and adversely affect the Company’s business, financial condition and operating results. Finally, any cost savings that are realized may be offset by losses in revenues or other charges to earnings.

Previous wording

The Company has incurred, and expects to continue to incur, significant transaction and acquisition-related costs in connection with the acquisition of HTLF. The Company has incurred, and expects to continue to incur, significant non-recurring costs associated with combining the operations of HTLF with its operations. These costs include legal, financial advisory, accounting, consulting and other advisory fees, severance/employment-related costs, public company filing fees and other regulatory fees, printing costs and other related costs. The Company has been collecting information in order to formulate detailed integration plans to deliver anticipated cost savings. Additional unanticipated costs may be incurred in the integration of the Company’s business with the business of HTLF, and there are many factors beyond the Company’s control that could affect the total amount or timing of integration costs. Although the Company expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction and acquisition-related costs over time, this net benefit may not be achieved in the near term, or at all.

Current wording

The Company has incurred significant transaction and acquisition-related costs in connection with the acquisition of HTLF. The Company has incurred significant non-recurring costs associated with combining the operations of HTLF with its operations. These costs include legal, financial advisory, accounting, consulting and other advisory fees, severance/employment-related costs, public company filing fees and other regulatory fees, printing costs and other related costs. Although the Company expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction and acquisition-related costs over time, this net benefit may not be achieved in the near term, or at all.

Previous wording

The market price for the Company’s common stock following the acquisition of HTLF may be affected by factors different from those that historically have affected the Company’s common stock. Following the acquisition of HTLF, the Company is now subject to risks related to HTLF’s historical business and has taken on its loans, investments and other obligations. This increased the Company’s credit risk and, if such obligations are not repaid or losses are incurred on such obligations, there could be material and adverse effects on the Company’s business. Additionally, where the Company’s historical business and HTLF’s historical business overlap, any risks the Company faces may be increased due to the acquisition of HTLF. For example, HTLF’s loan portfolio has a large concentration of commercial real estate loans, which the Company has added to its existing portfolio. This may exacerbate the risks the Company already undertakes with its own historical portfolio comprised meaningfully of commercial real estate loans and may result in new ones. Additionally, the value of real estate can fluctuate significantly in a short period of time as a result of market conditions in any of the geographic bank markets in which such real estate is located, as well as because funds are advanced based on estimates of costs and the estimated value of the completed project and therefore have a greater risk of default in a weaker economy. Construction projects require prudent underwriting including determination of a borrower’s ability to complete the project, while staying within budget and on time in accordance with construction plans. Economic events, supply chain issues, labor market disruptions, and other factors outside the Company’s control, or that of the borrowers, could negatively impact the future cash flow and market values of affected properties.

Current wording

The market price for the Company’s common stock following the acquisition of HTLF may be affected by factors different from those that historically have affected the Company’s common stock. Following the acquisition and conversion of HTLF, the Company is now subject to risks related to HTLF’s historical business and has taken on its loans, investments and other obligations. This increased the Company’s credit risk and, if such obligations are not repaid or losses are incurred on such obligations, there could be material and adverse effects on the Company’s business. Additionally, where the Company’s historical business and HTLF’s historical business overlap, any risks the Company faces may be increased due to the acquisition of HTLF. For example, HTLF’s loan portfolio has a large concentration of commercial real estate loans, which the Company has added to its existing portfolio. This may exacerbate the risks the Company already undertakes with its own historical portfolio comprised meaningfully of commercial real estate loans and may result in new ones. Additionally, the value of real estate can fluctuate significantly in a short period of time as a result of market conditions in any of the geographic bank markets in which such real estate is located, as well as because funds are advanced based on estimates of costs and the estimated value of the completed project and therefore have a greater risk of default in a weaker economy. Construction projects require prudent underwriting including determination of a borrower’s ability to complete the project, while staying within budget and on time in accordance with construction plans. Economic events, supply chain issues, labor market disruptions, and other factors outside the Company’s control, or that of the borrowers, could negatively impact the future cash flow and market values of affected properties.

Previous wording

The future results of the Company following the acquisition of HTLF may suffer if the Company does not effectively manage its expanded operations. As a result of the acquisition of HTLF, the size of the business of the Company will increase significantly. The Company’s future success will depend, in part, upon its ability to manage this expanded business, which may pose challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. The Company may also face additional regulatory requirements and scrutiny from governmental authorities as a result of the significant increase in the size of its business. The Company’s failure to meet such heightened expectations may expose it to regulatory enforcement actions and civil penalties which could have an adverse material impact on the Company’s business, financial condition, operations and reputation and could jeopardize the Company’s ability to pursue acquisition opportunities.

Current wording

The future results of the Company following the acquisition of HTLF may suffer if the Company does not effectively manage its expanded operations. As a result of the acquisition of HTLF, the size of the business of the Company increased significantly. The Company’s future success depends, in part, upon its success in continuing to manage the expanded business, which may pose challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. The Company may also face additional or different regulatory requirements and scrutiny from governmental authorities as a result of the expanded business operations. The Company’s failure to meet such expectations may expose it to regulatory enforcement actions and civil penalties which could have an adverse material impact on the Company’s business, financial condition, operations and reputation and could jeopardize the Company’s ability to pursue acquisition opportunities.

Previous wording

An inability to attract, retain, or motivate qualified employees could adversely affect the Company’s business or performance. Skilled employees are the Company’s most important resource, and competition for talented people is intense. Even though compensation is among the Company’s highest expenses, it may not be able to locate and hire the best people, keep them with the Company, or properly motivate them to perform at a high level. Recent scrutiny of compensation practices, especially in the financial-services industry, has made this only more difficult. In addition, some parts of the Company’s business are particularly dependent on key personnel, including investment management, asset servicing, and commercial lending. If the Company were to lose and find itself unable to replace these personnel or other skilled employees, including as a result of the acquisition of HTLF, or if the competition for talent drove its compensation costs to unsustainable levels, the Company’s business, results of operations, and financial condition could be negatively impacted.

Current wording

An inability to attract, retain, or motivate qualified employees could adversely affect the Company’s business or performance. Skilled employees are the Company’s most important resource, and competition for talented people is intense. Even though compensation is among the Company’s highest expenses, it may not be able to locate and hire the best people, keep them with the Company, or properly motivate them to perform at a high level. Recent scrutiny of compensation practices, especially in the financial-services industry, has made this only more difficult. In addition, some parts of the Company’s business are particularly dependent on key personnel, including investment management, asset servicing, and commercial lending. If the Company were to lose and find itself unable to replace these personnel or other skilled employees, or if the competition for talent drove its compensation costs to unsustainable levels, the Company’s business, results of operations, and financial condition could be negatively impacted.

Previous wording

The Company is subject to a variety of litigation and other proceedings, which could adversely affect its business or performance. The Company is involved from time to time in a variety of judicial, alternative-dispute, and other proceedings arising out of its business or operations. Additionally, the Company may incur costs in connection with the defense or settlement of any shareholder or stockholder lawsuits filed in connection with the acquisition of HTLF. The Company establishes reserves for claims when appropriate under generally accepted accounting principles, but costs often can be incurred in connection with a matter before any reserve has been created. The Company also maintains insurance policies to mitigate the cost of litigation and other proceedings, but these policies have deductibles, limits, and exclusions that may diminish their value or efficacy. Despite the Company’s efforts to appropriately reserve for claims and insure its business and operations, the actual costs associated with resolving a claim may be substantially higher than amounts reserved or covered. Substantial legal claims, even if not meritorious, could have a detrimental impact on the Company’s business, results of operations, and financial condition and could cause reputational harm.

Current wording

The Company is subject to a variety of litigation and other proceedings, which could adversely affect its business or performance. The Company is involved from time to time in a variety of judicial, alternative-dispute, and other proceedings arising out of its business or operations. Additionally, the Company may incur costs in connection with the defense or settlement of any shareholder or stockholder lawsuits resulting from its acquisition of HTLF. The Company establishes reserves for claims when appropriate under generally accepted accounting principles, but costs often can be incurred in connection with a matter before any reserve has been created. The Company also maintains insurance policies to mitigate the cost of litigation and other proceedings, but these policies have deductibles, limits, and exclusions that may diminish their value or efficacy. Despite the Company’s efforts to appropriately reserve for claims and insure its business and operations, the actual costs associated with resolving a claim may be substantially higher than amounts reserved or covered. Substantial legal claims, even if not meritorious, could have a detrimental impact on the Company’s business, results of operations, and financial condition and could cause reputational harm.

Previous wording

Additionally, acquisitions involve numerous risks and uncertainties, including lower-than-expected performance or higher-than-expected costs, difficulties related to integration, diversion of management’s attention from other business activities, changes in relationships with customers or counterparties, and the potential loss of key employees. An acquisition also could be dilutive to the Company’s current stockholders if preferred stock, common stock, or securities convertible into preferred stock or common stock were issued to fully or partially pay or fund the purchase price. The Company, moreover, may not be successful in identifying acquisition candidates, integrating acquired companies or businesses, or realizing the expected value from acquisitions. There is significant competition for valuable acquisition targets, and the Company may not be able to acquire other companies or businesses on attractive terms or at all. Further, the Company’s ability to complete future acquisitions may depend on factors outside its control, including changes in the presidential administration or in one or both houses of Congress. There can be no assurance that the Company will pursue future acquisitions, and the Company’s ability to grow and successfully compete in its markets and regions may be impaired if it chooses not to pursue, or is unable to successfully complete, acquisitions.

Current wording

Moreover, the standards by which bank and financial institution acquisitions will be evaluated may be subject to change. Additionally, acquisitions involve numerous risks and uncertainties, including lower-than-expected performance or higher-than-expected costs, difficulties related to integration, diversion of management’s attention from other business activities, changes in relationships with customers or counterparties, and the potential loss of key employees. An acquisition also could be dilutive to the Company’s current stockholders if preferred stock, common stock, or securities convertible into preferred stock or common stock were issued to fully or partially pay or fund the purchase price. The Company, moreover, may not be successful in identifying acquisition candidates, integrating acquired companies or businesses, or realizing the expected value from acquisitions. There is significant competition for valuable acquisition targets, and the Company may not be able to acquire other companies or businesses on attractive terms or at all. Further, the Company’s ability to complete future acquisitions may depend on factors outside its control, including changes in the presidential administration or in one or both houses of Congress. There can be no assurance that the Company will pursue future acquisitions, and the Company’s ability to grow and successfully compete in its markets and regions may be impaired if it chooses not to pursue, or is unable to successfully complete, acquisitions.

Previous wording

Expectations around Environmental, Social and Governance practices, as well as climate change, and related legislative and regulatory initiatives may result in additional risk and operational changes and expenditures that could significantly impact the Company’s business. Companies are facing increased scrutiny from customers, regulators and other stakeholders with respect to their environmental, social and governance (ESG) practices and disclosures. Institutional investors, and investor advocacy groups, in particular, are increasingly focused on these matters, and expectations in many of these areas can vary widely. For example, certain federal and state laws and regulations related to ESG issues may include provisions that conflict with other laws and regulations, which may increase the Company’s costs or limit the Company’s ability to conduct business in certain jurisdictions. In particular, there is an increasing number of state-level anti-ESG initiatives in the United States that may conflict with other regulatory requirements or the Company’s various stakeholders’ expectations. Such divergent, sometimes conflicting, views on ESG-related matters increase the risk that any action or lack thereof by the Company on such matters will be perceived negatively by some stakeholders. In addition, increased ESG related compliance costs could result in increases to the Company’s overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards, and fluctuations in or conflicts among these standards, could negatively impact the Company’s reputation, ability to do business with certain partners, and its stock price. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.

Current wording

Expectations around Environmental, Social and Governance practices, as well as climate change, and related legislative and regulatory initiatives may result in additional risk and operational changes and expenditures that could significantly impact the Company’s business. Companies are facing increased scrutiny from customers, regulators and other stakeholders with respect to their environmental, social and governance (ESG) practices and disclosures. Institutional investors, and investor advocacy groups, in particular, are increasingly focused on these matters, and expectations in many of these areas can vary widely. For example, certain federal and state laws and regulations related to ESG issues may include provisions that conflict with other laws and regulations, which may increase the Company’s costs or limit the Company’s ability to conduct business in certain jurisdictions. In particular, there is an increasing number of anti-ESG initiatives in the United States that may conflict with other regulatory requirements or the Company’s various stakeholders’ expectations. Such divergent, sometimes conflicting, views on ESG-related matters increase the risk that any action or lack thereof by the Company on such matters will be perceived negatively by some stakeholders. In addition, increased ESG related compliance costs could result in increases to the Company’s overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards, and fluctuations in or conflicts among these standards, could negatively impact the Company’s reputation, ability to do business with certain partners, and its stock price. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.

Previous wording

In addition to regulatory and investor expectations on environmental matters in general, the current and anticipated effects of climate change are creating an increasing level of concern for the state of the global environment. As a result, political and social attention to the issue of climate change has increased. In recent years, governments across the world have entered into international agreements to attempt to reduce global temperatures, in part by limiting greenhouse gas emissions. The United States Congress, state legislatures and federal and state regulatory agencies have proposed and advanced numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change. These agreements and measures may result in the imposition of taxes and fees, the required purchase of emission credits, and the implementation of significant operational changes, each of which may require the Company to expend significant capital and incur compliance, operating, maintenance and remediation costs. Given the lack of empirical data on the credit and other financial risks posed by climate change, it is impossible to predict how climate change may impact the Company’s financial condition and operations; however, as a banking organization, the physical effects of climate change may present certain unique risks to the Company. For example, weather disasters, shifts in local climates and other disruptions related to climate change may adversely affect the value of real properties securing the Company’s loans, which could diminish the value of the Company’s loan portfolio. Such events may also cause reductions in regional and local economic activity that may have an adverse effect on the Company’s customers, which could limit the Company’s ability to raise and invest capital in these areas and communities, each of which could have a material adverse effect on the Company’s financial condition and results of operations.

Current wording

In addition to regulatory and investor expectations on environmental matters in general, the current and anticipated effects of climate change are creating, for some stakeholders, an increasing level of concern for the state of the global environment. In recent years, governments across the world have entered into international agreements to attempt to reduce global temperatures, in part by limiting greenhouse gas emissions. In the United States, certain state legislatures and state regulatory agencies have proposed and advanced numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change, some of which conflict with other state or federal, initiatives or sentiments. In addition to the challenges of managing conflicting expectations of legislatures, agencies, and regulators with respect to climate change, measures designed to mitigate or bring awareness to climate change may result in the imposition of taxes and fees, the required purchase of emission credits, and the implementation of significant operational changes, each of which may require the Company to expend significant capital and incur compliance, operating, maintenance and remediation costs. Given the lack of empirical data on the credit and other financial risks posed by climate change, it is impossible to predict how climate change may impact the Company’s financial condition and operations; however, as a banking organization, the physical effects of climate change may present certain unique risks to the Company. For example, weather disasters, shifts in local climates and other disruptions related to climate change may adversely affect the value of real properties securing the Company’s loans, which could diminish the value of the Company’s loan portfolio. Such events may also cause reductions in regional and local economic activity that may have an adverse effect on the Company’s customers, which could limit the Company’s ability to raise and invest capital in these areas and communities, each of which could have a material adverse effect on the Company’s financial condition and results of operations.