FARMERS & MERCHANTS BANCORP INC

Previous wording

F&M Commercial Banking Division realized a small decrease in overall outstandings in the first quarter of 2026. The overall driver of this decrease was some large expected payoffs that occurred in the first quarter. Loan volume in this quarter was consistent with 2025; however, the payoffs and normal amortization outweighed the overall production. Lending rates and overall terms remained consistent with the previous quarter. The Iran war impact on the economy, oil and overall inflation are the largest concerns to commercial business in the F&M footprint in 2026. The commercial team continues to monitor the portfolio and borrowing bases closely for the impact from credit and inflationary pressures. Credit quality and past due pressures exist but remained good in first quarter 2026. Collateral values and auction values are still holding consistent with previous quarters. The agricultural portfolio, which includes grain elevators, saw increased usage in 2025 and we continue to monitor those trends in 2026.

Current wording

The Commercial Banking Division realized flat growth for the first half of 2026. Loan volume in first half was consistent with previous quarters; however, the expected payoffs and normal amortization outweighed the overall production. Lending rates and overall terms remained consistent with the previous quarter, however, there are more competitive pressures on offerings as we finished the second quarter. The Iran conflict's impact on the economy, oil and overall inflation remained the largest concerns to commercial business in the F&M footprint year-to-date 2026. The commercial team continues to monitor the portfolio and borrowing bases closely for the impact of credit and inflationary pressures. Credit quality and past due pressures exist but remained sound in second quarter. Collateral values and auction values are still consistent with previous quarters.

Previous wording

The Bank also provides checking account services, as well as savings and time deposit services such as certificates of deposits. In addition, Automated Teller Machines (ATMs) or Interactive Teller Machines (ITMs) are provided at most branch locations along with other independent locations in the market area. ITMs operate as an ATM with the addition of remote teller access to assist the user. The Bank has custodial services for Individual Retirement Accounts (IRAs) and Health Savings Accounts (HSAs). The Bank provides on-line banking access for consumer and business customers. For consumers, this includes bill-pay, on-line statement opportunities and mobile banking. For business customers, it provides the option of electronic transaction origination such as wire and Automated Clearing House (ACH) file transmittal. In addition, the Bank offers remote deposit capture or electronic deposit processing. Mobile banking has been widely accepted and used by consumers. Upgrades to our digital products and services continue to occur in both retail and business lines. The Bank continues to offer new suites of products as customer preferences change and the Bank adapts and adopts new technologies. The Bank continues to offer products that also meet the needs of our more traditional customers.

Current wording

The Bank also provides checking account services, as well as savings and time deposit services such as certificates of deposits. In addition, Automated Teller Machines (ATMs) or Interactive Teller Machines (ITMs) are provided at most branch locations along with other independent locations in the market area. ITMs operate as an ATM. The Bank has custodial services for Individual Retirement Accounts (IRAs) and Health Savings Accounts (HSAs). The Bank provides on-line banking access for consumer and business customers. For consumers, this includes bill-pay, on-line statement opportunities and mobile banking. For business customers, it provides the option of electronic transaction origination such as wire and Automated Clearing House (ACH) file transmittal. In addition, the Bank offers remote deposit capture or electronic deposit processing. Mobile banking has been widely accepted and used by consumers. Upgrades to our digital products and services continue to occur in both retail and business lines. The Bank continues to offer new suites of products as customer preferences change and the Bank adapts and adopts new technologies. The Bank continues to offer products that also meet the needs of our more traditional customers.

Previous wording

The Bank has established underwriting policies and procedures which facilitate operating in a safe and sound manner in accordance with supervisory and regulatory laws and guidance. Within this sphere of safety and soundness, the Bank's practice has been to not promote innovative, unproven credit products which may not be in the best interest of the Bank or its customers. The Bank does offer a hybrid mortgage loan. Hybrid loans are loans that start out as a fixed rate mortgage but after a set number of years automatically adjust to an adjustable rate mortgage. The Bank offers a seven and ten year fixed rate mortgage and a seven year jumbo fixed rate mortgage after which the interest rate will adjust annually for all. In order to offer longer-term fixed rate mortgages, the Bank does participate in the Freddie Mac secondary mortgage market, Farm Service Agency (FSA) guaranteed secondary agricultural market and Small Business Lending programs. The Bank also normally retains the servicing rights on these partially or 100% sold loans. In order for the customer to participate in these programs they must meet the requirements established by those agencies. In addition, the Bank does sell some of its longer term fixed rate agricultural mortgages into the secondary market with the aid of brokers. The Bank currently participates in four State of Ohio programs: Ag-Link, Grow Now, Ohio Homebuyers Plus and Buckeye Business Advantage. What all four of these programs have in common, is the ability to provide the Bank an avenue to offer a product that saves both the Bank and the consumer savings over other traditional products. With the acquisition of Perpetual Federal Savings Bank in the fourth quarter of 2021 and the addition of Peoples Federal Savings in the fourth quarter of 2022, the Bank saw an increase in fixed rate, long-term mortgage loans to our portfolio from that banking service area. In November 2023, the Bank began offering a home buyer mortgage program, Hometown Advantage Mortgage Program, which is available to low- and moderate-income home buyers as well as on properties located in low- and moderate-income census tracts. In the first quarter 2026, the Bank rolled out a CD/Savings secured loan product for credit building or credit repair to be secured by a time deposit or savings account with a minimum $1,000 loan amount, no origination costs, and no minimum credit score or debt-to-income requirements. This loan product is also intended to assist low- and moderate-income individuals with strengthening their credit.

Current wording

The Bank has established underwriting policies and procedures which facilitate operating in a safe and sound manner in accordance with supervisory and regulatory laws and guidance. Within this sphere of safety and soundness, the Bank's practice has been to not promote innovative, unproven credit products which may not be in the best interest of the Bank or its customers. The Bank does offer a hybrid mortgage loan. Hybrid mortgage loans are loans that start out as a fixed rate mortgage but after a set number of years automatically adjust to an adjustable rate mortgage. The Bank offers a seven and ten year fixed rate mortgage and a seven year jumbo fixed rate mortgage after which the interest rate will adjust annually for all. In order to offer longer-term fixed rate mortgages, the Bank does participate in the Freddie Mac secondary mortgage market, Farm Service Agency (FSA) guaranteed secondary agricultural market and Small Business Lending programs. The Bank also normally retains the servicing rights on these partially or 100% sold loans. In order for the customer to participate in these programs they must meet the requirements established by those agencies. In addition, the Bank does sell some of its longer term fixed rate agricultural mortgages into the secondary market with the aid of brokers. The Bank currently participates in four State of Ohio programs: Ag-Link, Grow Now, Ohio Homebuyers Plus and Buckeye Business Advantage. These four programs allow the Bank to offer a more competitive interest rate to customers. With the acquisition of Perpetual Federal Savings Bank in the fourth quarter of 2021 and the addition of Peoples Federal Savings in the fourth quarter of 2022, the Bank saw an increase in fixed rate, long-term mortgage loans to our portfolio from that banking service area. In November 2023, the Bank began offering a home buyer mortgage program, Hometown Advantage Mortgage Program, which is available to low- and moderate-income home buyers as well as on properties located in low- and moderate-income census tracts. In the first quarter 2026, the Bank rolled out a CD/Savings secured loan product for credit building or credit repair to be secured by a time deposit or savings account with a minimum $1,000 loan amount, no origination costs, and no minimum credit score or debt-to-income requirements. This loan product is also intended to assist low- and moderate-income individuals with strengthening their credit.

Previous wording

Loans above 100% are generally the result of sales tax.

Current wording

Loans with LTVs above 100% are generally the result of sales tax.

Previous wording

Wells. The Michigan footprint includes Oakland County. In our banking activities, we compete directly with other commercial banks, credit unions, farm credit services, and savings and loan institutions in each of our operating localities. In a number of our locations, we compete against entities which are much larger than us. The primary factors in competing for loans and deposits are the rates charged as well as location and quality of the services provided.

Current wording

The Bank’s primary market includes communities located in the Ohio counties of Butler, Champaign, Defiance, Fulton, Hancock, Henry, Lucas, Shelby, Williams, Wood and in the Indiana counties of Adams, Allen, DeKalb, Jay, Steuben and Wells. The Michigan footprint includes Oakland County. In our banking activities, we compete directly with other commercial banks, credit unions, farm credit services, and savings and loan institutions in each of our operating localities. In a number of our locations, we compete against entities which are much larger than us. The primary factors in competing for loans and deposits are the rates charged as well as location and quality of the services provided.

Previous wording

At March 31, 2026, we had 473 full time equivalent employees. The employees are not represented by a collective bargaining unit. We provide our employees with a comprehensive benefit program, some of which is contributory. We consider our employee relations to be good.

Current wording

At June 30, 2026, we had 477 full time equivalent employees. The employees are not represented by a collective bargaining unit. We provide our employees with a comprehensive benefit program, some of which is contributory. We consider our employee relations to be good.

Previous wording

Equal Credit Opportunity Act (ECOA) / Section 1071 – Small Business Lending Data Collection. The CFPB’s Section 1071 rule requires covered institutions to collect and report demographic data on small business credit applications. Court injunctions have stayed mandatory compliance for community banks, including the Bank. The Bank continues to monitor developments and prepare for future rulemaking.

Current wording

Equal Credit Opportunity Act (ECOA) / Section 1071 – Small Business Lending Data Collection. The CFPB’s Section 1071 rule requires covered institutions to collect and report demographic data on small business credit applications. Court injunctions originally stayed mandatory compliance for community banks, including the Bank. On May 1, 2026, the rule was finalized with an effective date of June 30, 2026 and compliance date of January 1, 2028 to begin data collection. The finalized rule revised certain provision of Regulation B, Subpart B which implements the Equal Credit Opportunity Act. Revisions included coverage of certain credit transactions and financial institutions; covered transaction thresholds for financial institutions subject to reporting; the definition of small business; and exclusion of certain data points not specifically required by Section 1071 statutory language. Initial analysis indicates the Bank may not immediately be subject to data reporting requirements as of January 1, 2028. The Bank continues to evaluate these final rules to gauge impact on small business lending operations, monitor loan volume of reportable loans, and assess these changes in connection with its fair lending program and broader compliance management system.

Previous wording

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, deferred loan fees and costs. Accrued interest receivable totaled $11.9 million and $11.7 million at March 31, 2026 and December 31, 2025, respectively, and was reported in Other Assets on the condensed consolidated balance sheets and is excluded from the estimate of credit losses.

Current wording

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, deferred loan fees and costs. Accrued interest receivable totaled $12.6 million and $11.7 million at June 30, 2026 and December 31, 2025, respectively, and was reported in Other Assets on the condensed consolidated balance sheets and is excluded from the estimate of credit losses.

Previous wording

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation; reserves for expected credit losses for collateral-dependent loans are based on the expected shortfall of the loan based on the discounted collateral value. This specific reserve portion of the ACL was $497 thousand at March 31, 2026 and $145 thousand at December 31, 2025.

Current wording

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation; reserves for expected credit losses for collateral-dependent loans are based on the expected shortfall of the loan based on the discounted collateral value. This specific reserve portion of the ACL was $211 thousand at June 30, 2026 and $145 thousand at December 31, 2025.

Previous wording

The Company continues to focus on deposit growth in both its legacy and newer markets. Core deposits may provide opportunities for additional noninterest income for the Company through the opportunity to cross-sell additional services such as treasury management services. Noninterest bearing deposits increased $18.0 million from March 31, 2025 to March 31, 2026. Interest bearing deposits also increased by $91.3 million over the same time period. This was comprised of an increase in NOW accounts of $35.8 million, an increase in savings accounts of $56.7 million and a decrease in time deposits of $1.1 million.

Current wording

The Company continues to focus on deposit growth in both its legacy and newer markets. Core deposits may provide opportunities for additional noninterest income for the Company through the opportunity to cross-sell additional services such as treasury management services. Noninterest bearing deposits increased $8.3 million from June 30, 2025 to June 30, 2026. Interest bearing deposits also increased by $150.8 million over the same time period. This was comprised of an increase in savings accounts of $79.9 million, an increase in time deposits of $71.6 million and a decrease in NOW accounts of $700 thousand.

Previous wording

In addition to cash and cash equivalent balances, the Bank has access to $213 million in unsecured Federal Funds lines for overnight funds from our correspondent banking relationships, of which includes a $50 million line of credit that was added in the fourth quarter of 2025. The Company also has a $15 million line of credit. The Bank has also established four market sources for brokered CDs. Lastly, the Bank’s secured borrowing capacity limits at the FHLB would have allowed draws based on current collateral pledging of $114.0 million; however, any amount borrowed over $9.9 million may require additional stock purchases. Pledged collateral included eligible 1-4 family, home equity, and specific commercial and multi-family real estate loans.

Current wording

In addition to cash and cash equivalent balance increases, the Bank has access to $213 million in unsecured Federal Funds lines for overnight funds from our correspondent banking relationships, which includes a $50 million line of credit that was added in the fourth quarter of 2025. The Company also has a $15 million line of credit. The Bank has established four market sources for brokered CDs as additional contingent funding resources. Lastly, the Bank’s secured borrowing capacity limits at the FHLB Cincinnati is $157.7 million based on current collateral pledging. Any additional borrowing over $7.9 million may require additional stock purchases. Pledged collateral included eligible 1-4 family, home equity, and specific commercial and multi-family real estate loans.

Previous wording

At March 31, 2026, the investment portfolio of the Bank had $273.8 million of pledged securities with $151.2 million available to use as collateral for future pledged borrowings. Currently, securities may be pledged to offset public deposits, our repurchase agreement portfolio or at the Federal Discount Window.

Current wording

At June 30, 2026, the investment portfolio of the Bank had $277.2 million of pledged securities with $161.4 million available in unpledged securities for future borrowings. Currently, securities may be pledged to offset public deposits, our repurchase agreement portfolio or at the Federal Discount Window.

Previous wording

The Company continues to hold bi-weekly, what is termed “sub-ALCO”, meetings along with continuing the use of a liquidity dashboard and cashflow projection. The liquidity dashboard and cashflow projection are actively managed documents which continue to be enhanced to provide the most accurate forecast of liquidity positions for the next five months. The cashflow projection includes loan pipeline expectations and runoffs, and maturities of both sources and uses of funds. The Company has the tools to monitor liquidity and continues to manage the risks to ensure adequate liquidity is maintained.

Current wording

The Company continues to hold bi-weekly, what is termed “sub-ALCO”, meetings along with continuing the use of a liquidity dashboard and cashflow projection. The liquidity dashboard and the five month forward looking cashflow projection are actively managed documents which continue to be enhanced to provide the most accurate forecast of liquidity positions. The cashflow projection includes loan pipeline expectations and runoffs, and maturities of both sources and uses of funds. The Company has the tools to monitor liquidity and continues to manage the risks to ensure adequate liquidity is maintained.

Previous wording

In comparing to the same prior year period, the March 31, 2026 (at amortized cost) loan balances of $2.7 billion accounted for $100.7 million or a 3.9% increase when compared to same period 2025. Commercial and industrial loans increased 11.1% while commercial real estate loans saw a decrease of 0.8% as compared to 2025. Agricultural related loans increased 20.3% year over year. Individual growth was comprised of 48.8% in non-real estate agricultural loans while agricultural real estate loans remained relatively unchanged. Consumer real estate loans increased by 2.3% while consumer loans decreased by 7.4%. Other loans decreased by 9.7%. The Company's strong team of lenders remain focused on providing customers valuable localized services and thereby increasing our market share.

Current wording

In comparing to the same period in 2025, the June 30, 2026 (at amortized cost) loan balances of $2.7 billion accounted for $79.5 million or a 3.0% increase. Commercial and industrial loans increased 14.8% while commercial real estate loans saw a decrease of 2.8% as compared to 2025. Agricultural related loans increased 19.5% year over year. Individual growth was comprised of 54.8% in non-real estate agricultural loans while agricultural real estate loans decreased by 5.8%. Within the non-real estate agricultural loan group, approximately half of the growth was related to new originations of loans while the other half was attributable to higher utilization of lines of credit. Consumer real estate loans increased by 1.9% while consumer loans decreased by 14.1%. Other loans decreased by 8.4%. The Company's strong team of lenders remain focused on providing customers valuable localized services and thereby increasing our market share.

Previous wording

The Bank maintains a well-balanced, diverse and high performing commercial real estate loan portfolio. Gross commercial real estate loans, excluding deferred loan fees and costs, represented 49.05% of the Company's total gross loan portfolio as of March 31, 2026. The tables below present the commercial real estate (CRE) portfolio segment by category, location and loan grade.

Current wording

The Bank maintains a well-balanced, diverse and high performing commercial real estate loan portfolio. Gross commercial real estate loans, excluding deferred loan fees and costs, represented 48.36% of the Company's total gross loan portfolio as of June 30, 2026. The tables below present the commercial real estate (CRE) portfolio segment by category, location and loan grade.

Previous wording

Management feels confident that liquidity needs can be met through additional maturities from the security portfolio, increased deposit generating efforts and additional borrowings. While the security portfolio has been utilized to fund loan growth in previous periods, additional sources have been cultivated. The security portfolio increased in the first three months of 2026 from year end 2025 due to purchases of $34.9 million partially offset by sales of $5.4 million, maturities and paydowns of $19.6 million, net accretion of $78 thousand and a $2.1 million increase in unrealized losses. During the current quarter, sales of odd lot mortgage-backed securities were executed and replaced with purchases of higher yielding securities. The amount of pledged investment securities increased by $7.3 million as compared to year end and increased $1.9 million as compared to March 31, 2025. As of March 31, 2026, pledged investment securities totaled $273.8 million. The Company plans to make additional purchases of securities the remainder of the year for the purposes of increasing our investment holdings in Community Reinvestment Act (CRA) qualifying securities, liquidity and contingency planning and as a means of balance sheet gap management.

Current wording

Management feels confident that anticipated liquidity needs can be met through additional maturities from the security portfolio, increased deposit generating efforts and additional borrowings. While the security portfolio has been utilized to fund loan growth in previous periods, additional sources have been cultivated. The security portfolio increased in the first six months of 2026 from year end 2025 due to purchases of $72.4 million which were partially offset by sales of $5.4 million, maturities and paydowns of $45.1 million, net accretion of $207 thousand and a $2.6 million increase in unrealized losses. In the first quarter 2026, sales of odd lot mortgage-backed securities were executed and generated a realized loss of $347 thousand which were replaced with purchases of higher yielding securities. During the current quarter, the security portfolio increased $11.6 million with purchases of approximately $37.6 million partially offset by maturities and paydowns of $25.5 million, net accretion of $129 thousand and a $545 thousand increase in unrealized losses. The amount of pledged investment securities increased by $10.7 million as compared to year end and $9 million as compared to June 30, 2025. As of June 30, 2026, pledged investment securities totaled $277.2 million. The Company plans to make additional purchases of securities the remainder of the year for the purposes of increasing our investment holdings, liquidity and contingency planning and as a means of balance sheet gap management.

Previous wording

As mentioned previously, an additional $114.0 million is also available to the Bank from the FHLB based on current amounts of pledged collateral. The Bank has pledged eligible 1-4 family, home equity, commercial real estate, multifamily real estate portfolios and specific securities. The CRE holdings may be adjusted quarterly to replace paydowns or increase availability of funds. Based on total asset capacity, the Bank would have more than $1.1 billion available to borrow.

Current wording

As mentioned previously, an additional $157.7 million is also available to the Bank from the FHLB based on current amounts of pledged collateral. The Bank has pledged eligible 1-4 family, home equity, commercial real estate, multifamily real estate portfolios and specific securities. The CRE holdings may be adjusted quarterly to replace paydowns or increase availability of funds. Based on total asset capacity, the Bank would have more than $1.2 billion available to borrow.

Previous wording

Overall total assets increased 1.5% or $51.2 million since year end 2025. The largest areas of growth occurred in the cash and due from banks of $75.6 million offset by decreases in the loan portfolio of $31.9 million. Although the loan portfolio did decrease, the Bank continues to pursue loan growth with total new money funded in the quarter ended March 31, 2026 of $177.8 million.

Current wording

Overall total assets increased 2.0% or $67.7 million since year end 2025 and $16.5 million or 0.47% since March 31, 2026. The largest areas of growth since December 2025 occurred in the cash and due from banks and the security portfolio of $58.7 million and $19.2 million, respectively, offset by decreases in the loan portfolio of $8.9 million. Although the loan portfolio did decrease, the Bank continues to pursue loan growth with total new money funded in the six months ended June 30, 2026 of $445.6 million and $267.8 million in the quarter ended June 30, 2026. Since March 31, 2026, the largest areas of growth have occurred in the loan portfolio of $22.9 million and the security portfolio of $11.6 million offset by a decrease of $17.1 million in cash and due from banks.

Previous wording

Total liabilities increased $46.1 million since year end 2025. The largest increase was in the total deposits of $78.9 million. The mix of deposits saw increases in interest-bearing NOW accounts, savings and money market deposit accounts and time deposit accounts offset by decreases in noninterest-bearing accounts since December 31, 2025.

Current wording

Total liabilities increased $53.9 million since year end 2025 and $7.8 million since March 31, 2026. The largest increase was in the total deposits of $138.7 million. The mix of deposits saw increases in interest-bearing NOW accounts, savings and money market deposit accounts and time deposit accounts offset by decreases in noninterest-bearing accounts since December 31, 2025. During the first six months of 2026, FHLB advances of $58.9 million and federal funds purchased of $15 million have been repaid. Since March 31, 2026, deposit increases totaling $59.7 million have been offset with the repayment of FHLB advances of $50.5 million.

Previous wording

Shareholders’ equity increased by $5.1 million as of March 31, 2026 compared to year end 2025. Earnings exceeded dividend declarations during the three months ended March 31, 2026. Accumulated other comprehensive loss increased in unrealized loss position by $1.6 million from December 2025 to an unrealized loss of $13.6 million on March 31, 2026. Dividends declared remained at $0.23 per share and were 4.0% over first quarter 2025’s $0.22125 per share. Compared to March 31, 2025, shareholders’ equity increased 9.1% or $31.3 million with $6.6 million attributed to an improvement in accumulated other comprehensive loss. Net income was higher for the quarter ended March 2026 compared to March 2025 by $2.6 million.

Current wording

Shareholders’ equity increased by $13.9 million as of June 30, 2026 compared to year end 2025 and $8.8 million since March 31, 2026. Accumulated other comprehensive loss increased in unrealized loss position by $2.1 million from December 2025 to an unrealized loss of approximately $14 million on June 30, 2026. Dividends declared remained unchanged from the prior quarter at $0.23 per share and were 4.0% over second quarter 2025’s $0.22125 per share. Compared to June 30, 2025, shareholders’ equity increased 9.7% or $33.9 million with $5.3 million attributed to an improvement in accumulated other comprehensive loss. Net income was higher for the six months ended June 2026 compared to June 2025 by 45.8% or $6.7 million.

Previous wording

While the Holding Company generally has sufficient liquidity to maintain its dividend policy without relying on the upstreaming of dividends from the Bank, the Bank declared a $6.0 million dividend during the first quarter of 2026. The excess of the upstreamed funds are being considered for potential sub-debt paydowns or the repurchase of shares.

Current wording

While the Holding Company generally has sufficient liquidity to maintain its dividend policy without relying on the upstreaming of dividends from the Bank, the Bank declared a $6 million dividend during the second quarter of 2026. The excess of the upstreamed funds are being considered for potential sub-debt paydowns or for the repurchase of shares.

Previous wording

When comparing first quarter 2026 to first quarter 2025, average loan balances grew $121.1 million, which represented a 4.7% increase. Interest income on loans increased $2.8 million or 7.4% as compared to the quarter ended March 31, 2025. The Company's loan portfolio is 47.3% variable rate with 31.9% of total loans subject to repricing within the next three months and 41.7% of total loans subject to repricing within the next twelve months.

Current wording

When comparing second quarter 2026 to second quarter 2025, average loan balances grew $73.7 million, which represented a 2.8% increase. Interest income on loans increased $1.3 million or 3.3% as compared to the quarter ended June 30, 2025. The Company's loan portfolio is 49.8% variable rate with 32.7% of total loans subject to repricing within the next three months and 36.1% of total loans subject to repricing during the remainder of 2026.

Previous wording

The overall total average balance of the Bank’s earning assets increased by $57.3 million and interest income for the quarter comparisons was higher for first quarter 2026 by 5.6% or $2.3 million as compared to first quarter 2025. Rate changes between periods have contributed to approximately 48.4% of the growth.

Current wording

The overall total average balance of the Bank’s earning assets increased by $139.1 million and interest income for the quarter comparisons was higher for second quarter 2026 by 5.0% or approximately $2.2 million as compared to second quarter 2025. Rate changes between periods have contributed to approximately 15.3% of the growth.

Previous wording

Annualized yield, for the quarter ended March 31, 2026, was 5.38% as compared to 5.19% for the quarter ended March 31, 2025. The following charts demonstrate loan rate increases accounted for 36.8% of the increased loan interest income while increased loan balances accounted for the remaining 63.2%. The yields on tax-exempt securities and the portion of the tax-exempt IDB and agricultural loans included in loans have been tax adjusted based on a 21% tax rate in the charts that follow. The tax-exempt interest income was $382 and $135 thousand for first quarter 2026 and 2025, respectively, which resulted in a federal tax savings of $80 and $28 thousand, respectively, less the TEFRA adjustments of $7 and $4 thousand, respectively.

Current wording

Annualized yield, for the quarter ended June 30, 2026, was 5.48% as compared to 5.45% for the quarter ended June 30, 2025. The following charts demonstrate loan rate increases accounted for 15.0% of the increased loan interest income while increased loan balances accounted for the remaining 85.0%. The yields on tax-exempt securities and the portion of the tax-exempt IDB and agricultural loans included in loans have been tax adjusted based on a 21% tax rate in the charts that follow. The tax-exempt interest income was $524 and $134 thousand for second quarter 2026 and 2025, respectively, which resulted in a federal tax savings of $110 and $28 thousand, respectively, less the TEFRA adjustments of $10 and $4 thousand, respectively.

Previous wording

Contributing to the increased net interest income for the quarter was a decrease in interest expense of $1.2 million or 7.2% compared to first quarter 2025. Since March 31, 2025, average interest-bearing deposit balances have increased $56.3 million or 2.6% while the Company recognized $739 thousand less in interest expense for the most recent quarter. In September 2025, the Federal Reserve made its first rate change to the federal funds rate for 2025 with a reduction of 25 basis points followed by reductions of 25 basis points in both October and December. Deposit rates continue to be reviewed and adjusted with the rate changes. The following charts demonstrate increased average interest-bearing deposit balances accounted for 31.8% of additional interest-bearing deposit expense while rate decreases accounted for decreased interest-bearing deposit expense of 131.8%. Noninterest-bearing deposits balances increased $20.6 million compared to first quarter 2025. The Bank continues to focus on capturing the full customer relationship; however, it has sometimes resulted in more expensive deposits being brought in.

Current wording

Contributing to the increased net interest income for the quarter was a decrease in interest expense of approximately $1.1 million or 5.9% compared to second quarter 2025. Since June 30, 2025, average interest-bearing deposit balances have increased $150.1 million or 6.7% while the Company recognized $381 thousand less in interest expense for the most recent quarter. In September 2025, the Federal Reserve made its first rate change to the federal funds rate for 2025 with a reduction of 25 basis points followed by reductions of 25 basis points in both October and December. There have been no changes to the federal funds rate in 2026. Deposit rates continue to be reviewed and adjusted with the rate changes. The following charts demonstrate increased average interest-bearing deposit balances accounted for $994 thousand of additional interest-bearing deposit expense while rate decreases accounted for decreased interest-bearing deposit expense of $1.4 million. Noninterest-bearing deposits balances increased $20.5 million compared to second quarter 2025. The Bank continues to focus on capturing the full customer relationship; however, it has sometimes resulted in more expensive deposits being brought in.

Previous wording

Interest expense on borrowed funds decreased $374 thousand in the first quarter 2026 over the same time frame in 2025 due to the repayment of FHLB advances. During the current quarter, FHLB borrowings of $40.6 million were repaid and proceeds from new borrowings were $32.2 million compared to repayment of borrowings of $585 thousand in first quarter 2025. Interest expense on federal funds purchased and securities sold under agreement to repurchase decreased $126 thousand compared to first quarter 2025 due to the decrease of $10.2 million in average balances. Cost of funds decreased even with growth in interest-bearing deposit balances offset by decreased borrowings and securities sold under agreement to repurchase compared to first quarter 2025. The average cost of funds decreased to 2.54% in first quarter 2026 compared to 2.76% in first quarter 2025. Refer to Note 11 for additional information on subordinated notes.

Current wording

Interest expense on borrowed funds decreased $517 thousand in the second quarter 2026 over the same time frame in 2025 due to the repayment of FHLB advances. During the current quarter, FHLB borrowings of $50.5 million were repaid, furthering the FHLB borrowing repayment strategy from second quarter 2025 at which time $57 million were repaid. Interest expense on federal funds purchased and securities sold under agreement to repurchase decreased $154 thousand compared to second quarter 2025 due to the decrease of $12.5 million in average balances. Cost of funds decreased even with growth in interest-bearing deposit balances offset by decreased borrowings and securities sold under agreement to repurchase compared to second quarter 2025. The average cost of funds decreased to 2.56% in second quarter 2026 compared to 2.83% in second quarter 2025. Interest expense due to subordinated notes was unchanged during the quarter comparisons. Refer to Note 11 for additional information on subordinated notes.

Previous wording

Net interest income increased $3.5 million for the first quarter 2026 over the same time frame in 2025 due to the increase in interest income of $2.3 million combined with the interest expense decrease of $1.2 million as previously mentioned. As the new loans added in 2025 and 2026 generate more income, management expects the benefits of the Company’s strategy of repositioning the balance sheet to increase interest income in the long run. The Company has more opportunity for improved asset yield with loans repricing. Additionally, funding costs should continue to come down as well. Loans as a percentage of earning assets increased to 83.9% in first quarter 2026 compared to 81.6% in first quarter 2025. Loans to total assets increased to 79.1% in first quarter 2026 compared to 77.5% for the same period 2025. The percentage of earning assets to total assets decreased slightly to 94.6% for the three months ended March 31, 2026 compared to 95.0% for the three months ended March 31, 2025. In terms of net interest margin, the Bank recognizes competition for deposits will continue; however, there is a greater opportunity for gradual improvement with loans repricing upwards in the next year and a likely continuing decrease in cost of funds.

Current wording

Net interest income increased $3.2 million for the second quarter 2026 over the same time frame in 2025 due to the increase in interest income of approximately $2.2 million combined with the interest expense decrease of approximately $1.1 million as previously mentioned. As the new loans added in 2025 and 2026 generate more income, management expects the benefits of the Company’s strategy of repositioning the balance sheet to increase interest income in the long run. The Company has some opportunity for improved asset yield with loans repricing in 2026 and a greater opportunity beginning in 2027 and 2028. Loans as a percentage of earning assets decreased to 80.8% in second quarter 2026 compared to 82.0% in second quarter 2025. Loans to total assets decreased to 76.3% in second quarter 2026 compared to 77.7% for the same period 2025. The percentage of earning assets to total assets decreased slightly to 94.5% for the three months ended June 30, 2026 compared to 94.8% for the three months ended June 30, 2025. In terms of net interest margin, the Bank recognizes competition for deposits will continue; however, there is a greater opportunity for gradual improvement with repricing loans upwards in the next year.

Previous wording

Total provision for credit losses decreased $243 thousand for the three months ended March 31, 2026 as compared to the same period in 2025. Management continues to monitor asset quality, making adjustments to the provision as necessary. The impact of higher interest rates and inflation are taken into consideration when reviewing qualitative factors. Loan charge-offs were $101 thousand lower during the three months ended March 31, 2026 than the same period in 2025 with all loan charge-offs for the current quarter in the consumer portfolio and consumer real estate portfolio segments. Of the total consumer charge-offs, $124 and $127 thousand were for automobiles and trucks for the three months ended March 31, 2026 and 2025, respectively. Recoveries were $24 thousand higher during the three months ended March 31, 2026 as compared to same period in 2025 with 90.5% of total current quarter recoveries in the consumer portfolio segment. Of the total consumer recoveries, $40 and $3 thousand were for automobiles and trucks for the three months ended March 31, 2026 and 2025, respectively. Combined net charge-offs were $125 thousand lower in the three months ended March 31, 2026 than the same time period 2025. All of the time periods in 2025 and 2026 had net charge-offs to total loans ratios lower than 0.1% attesting to the strong asset quality of the Bank's loan portfolio.

Current wording

Total provision for credit losses decreased $367 thousand for the three months ended June 30, 2026 as compared to the same period in 2025. Management continues to monitor asset quality, making adjustments to the provision as necessary, in accordance with the Bank's chosen CECL methodology. The impact of higher interest rates and inflation are taken into consideration when reviewing qualitative factors. Loan charge-offs were $41 thousand higher during the three months ended June 30, 2026 than the same period in 2025. Loan charge-offs for the current quarter were in the consumer portfolio and commercial and industrial portfolio segments while all charge-offs for the same period in 2025 were in the consumer portfolio. Of the total consumer charge-offs, $80 and $54 thousand were for automobiles and trucks for the three months ended June 30, 2026 and 2025, respectively. 2025 consumer charge-offs also included $26 thousand for recreational vehicles. Recoveries were $15 thousand higher during the three months ended June 30, 2026 as compared to same period in 2025 with 95.5% of total current quarter recoveries in the consumer portfolio and agricultural portfolio segments. Of the total consumer recoveries, $11 thousand were for automobiles and trucks and $4 thousand were for recreational vehicles for the three months ended June 30, 2026 compared to $4 thousand for automobiles and trucks and $49 thousand for recreational vehicles for the same period in 2025. Combined net charge-offs were $26 thousand higher in the three months ended June 30, 2026 than the same time period in 2025. All of the time periods in 2025 and 2026 had net charge-offs to total loans ratios lower than 0.1% attesting to the strong asset quality of the Bank's loan portfolio.

Previous wording

Loans past due 30 or more days increased $9.7 million at March 31, 2026 as compared to March 31, 2025. The largest changes were attributed to the agricultural real estate portfolio segment past due balances which increased $6.5 million for the same time period, of which $4.9 million is attributed to one loan. The agricultural portfolio segment also increased $3.3 million over March 31, 2025, with $2.2 million attributed to one loan.

Current wording

Loans past due 30 or more days increased $4.7 million at June 30, 2026 as compared to June 30, 2025. The largest changes were attributed to the agricultural real estate portfolio segment which increased $4.7 million for the same time period, of which $3.8 million is attributed to one loan. The commercial and industrial portfolio segment also increased $420 thousand while the consumer real estate portfolio segment decreased $631 thousand as compared to June 30, 2025.

Previous wording

Loans classified as nonaccrual were higher as of March 31, 2026 at $11.1 million as compared to $4.5 million as of March 31, 2025. The agricultural real estate and agricultural portfolio segments increased $5.1 million and $1.4 million, respectively, as compared to March 31, 2025. Of the combined agricultural related increase, $6.3 million is for one relationship with a specific allocation of $358 thousand as of March 31, 2026. The commercial real estate portfolio segment decreased $455 thousand compared to March 31, 2025 while the consumer real estate portfolio segment increased $410 thousand compared to March 31, 2025. Nonaccrual loans in the commercial and industrial portfolio segment increased $102 thousand compared to March 31, 2025.

Current wording

Loans classified as nonaccrual were higher as of June 30, 2026 at $7.4 million as compared to $3.7 million as of June 30, 2025. The agricultural real estate portfolio segment increased $4.1 million as compared to June 30, 2025 with $3.8 million attributed to one loan with a specific allocation of $174 thousand. The consumer real estate portfolio and commercial real estate portfolio segments decreased $397 and $141 thousand, respectively, as compared to June 30, 2025. Nonaccrual loans in the agricultural portfolio and consumer portfolio segments increased $56 and $54 thousand, respectively, as compared to June 30, 2025.

Previous wording

The volume of total originations of loans held for sale increased and the gain on the sale of these loans was $291 thousand higher for the three months ended March 31, 2026 over the same period in 2025. Total originations of loans held for sale for the three months ended March 31, 2026 were $23.8 million with proceeds from sale at $22.8 million for 2026 compared to 2025’s activity of $13.0 million in originations and $13.9 million in sales. The mortgages sold were both 1-4 family real estate and agricultural real estate loans originated for sale.

Current wording

The volume of total originations of loans held for sale increased and the associated gain on the sale of these loans was $426 thousand higher for the three months ended June 30, 2026 over the same period in 2025. Total originations of loans held for sale for the three months ended June 30, 2026 were $25.6 million with proceeds from sale at $28.9 million for 2026 compared to 2025’s activity of $17.2 million in originations and $13.4 million in sales. The mortgages sold were both 1-4 family real estate and agricultural real estate loans originated for sale.

Previous wording

The impact of loan servicing rights, both to income and expense, is shown in the following table which reconciles the value of loan servicing rights. The capitalization runs through noninterest income while the amortization thereof is included in noninterest expense. For the three months ended March 31, 2026 and 2025, loan servicing rights caused a net $101 thousand and $100 thousand in income, respectively. Impairment of $304 thousand and a reversal of $49 thousand was recognized during the three months ended March 31, 2026 and 2025, respectively. Capitalized additions of agricultural real estate loan servicing rights were $136 thousand for the three months ended March 31, 2026 compared to $170 thousand in capitalized additions for the three months ended March 31, 2025. Amortization of agricultural real estate loan servicing rights were $76 thousand and $65 thousand for the three months ended March 31, 2026 and 2025, respectively. Impairment of agricultural real estate loan servicing rights was $1.2 million at March 31, 2026 compared to $46 thousand at March 31, 2025. For 1-4 family real estate loans of 15 years and less, the market value of the loan servicing rights was 1.430% in the first quarter 2026 versus 1.277% in third quarter 2025. For 1-4 family real estate loans over 15 years, the value was 1.727% versus 1.520% for the same periods respectively. At March 31, 2026 and 2025, the carrying value of certain strata were slightly below the market value thus requiring the establishment of a $5 and $2 thousand valuation allowance, respectively, for 1-4 family real estate servicing rights.

Current wording

The impact of loan servicing rights, both to income and expense, is shown in the following table which reconciles the value of loan servicing rights. The capitalization runs through noninterest income while the amortization thereof is included in noninterest expense. For the three months ended June 30, 2026 and 2025, loan servicing rights caused a net $205 thousand and $44 thousand in income, respectively. Impairment of $92 thousand and $38 thousand was recognized during the three months ended June 30, 2026 and 2025, respectively. Capitalized additions of agricultural real estate loan servicing rights were $155 thousand for the three months ended June 30, 2026 compared to $76 thousand in capitalized additions for the three months ended June 30, 2025. Amortization of agricultural real estate loan servicing rights were $85 thousand and $74 thousand for the three months ended June 30, 2026 and 2025, respectively. The valuation allowance of agricultural real estate loan servicing rights was $1.3 million at June 30, 2026 compared to $84 thousand at June 30, 2025. For 1-4 family real estate loans of 15 years and less, the market value of the loan servicing rights was 1.378% in the second quarter 2026 versus 1.354% in second quarter 2025. For 1-4 family real estate loans over 15 years, the value was 1.744% versus 1.561% for the same periods, respectively. At June 30, 2026 and 2025, the carrying value of certain strata were slightly below the market value thus requiring the establishment of a $5 and $3 thousand valuation allowance, respectively, for 1-4 family real estate servicing rights.

Previous wording

The available-for-sale securities portfolio decreased in average balances by $24.8 million or 5.2% when comparing to the same quarter in 2025 with the income associated with the security portfolio increasing $82 thousand over first quarter 2025. During the current quarter, maturities and paydowns of securities were $19.6 million, sales were $5.4 million, purchases were $34.9 million and unrealized loss increased $1.6 million. The security sales generated a realized loss of $347 thousand which is projected to be recouped from security purchases with a higher yield over 30.55 months. Federal funds sold and interest-bearing deposits decreased in average balances by $39.1 million as compared to the same quarter in 2025 with decreased income of approximately $541 thousand for the current quarter. The decreased balances are primarily the result of funding loans, purchases of available-for-sale securities and repayment of other borrowed money.

Current wording

The available-for-sale securities portfolio decreased in average balances by $14.9 million or 3.1% when comparing to the same period in 2025 with the income associated with the security portfolio increasing $469 thousand over the six months ended June 30, 2025. During first quarter 2026, security sales of $5.4 million generated a realized loss of $347 thousand which is projected to be recouped from security purchases with a higher yield over 30.55 months. The additional income from the security portfolio can be attributed to the increased book yield of 2.75% as of June 30, 2026 from 2.26% as of June 30, 2025. Federal funds sold and interest-bearing deposits increased in average balances by $16 million as compared to the same six month period ended June 30, 2025 with decreased income of approximately $82 thousand for the current period. The increased balances are primarily the result of deposit generation offset by funding loans and repayment of other borrowed money.

Previous wording

As the following chart indicates, the improvement in yields on interest earning assets of 19 basis points combined with the decreased cost of funds of 22 basis points equated to a 41 basis point improvement in net interest spread when comparing to the same period a year ago. Competition for deposits remains intense with most competitors offering special rates for specific terms.

Current wording

As the following chart indicates, the improvement in yields on interest earning assets of 12 basis points combined with the decreased cost of funds of 29 basis points equated to a 41 basis point improvement in net interest spread when comparing to the same period a year ago. Competition for deposits remains intense with most competitors offering special rates for specific terms.

Previous wording

The balance of loans, amortized cost at March 31, 2026, March 31, 2025 and March 31, 2024 within this chart does not include a fair value basis adjustment for derivatives of $1.1 million, $1.7 million and $969 thousand, respectively, or a daily average outstanding balance of $1.6 million, $1.2 million or $2.0 million, respectively. Refer to Note 7 for additional information related to derivative financial instruments.

Current wording

The balance of loans, amortized cost at June 30, 2026, June 30, 2025 and June 30, 2024 within this chart does not include a fair value basis adjustment for derivatives of $546 thousand, $1.9 million and $612 thousand, respectively, or a daily average outstanding balance of $1.3 million, $1.6 million or $1.2 million, respectively. Refer to Note 7 for additional information related to derivative financial instruments.

Previous wording

Noninterest income was up $838 thousand, or 20.1%, for the three months ended March 31, 2026 over the same time frame in 2025. Customer service fees increased by $102 thousand as compared to the three months ended March 31, 2025 which was due primarily to increases of miscellaneous customer service fees of $47 thousand and mortgage release fees of $38 thousand. Other service fees increased by $159 thousand compared to the same period in 2025, which includes overdraft and returned check fees of $78 thousand and combined service charges on DDA, savings accounts, ATM and miscellaneous of $76 thousand. Servicing rights income for 1-4 family real estate loans increased $77 thousand while those associated with agricultural real estate loans decreased $33 thousand as compared to the same period in 2025. Interchange income increased $92 thousand, which included an additional $58 thousand received for support fees from Mastercard, and the cash surrender value of bank owned life insurance increased $411 thousand from the same three months ended March 31, 2025. The increase in BOLI revenue was due to more investment dollars and higher earnings while the Bank is repositioning our holdings. Net gain on sale of loans increased $291 thousand as compared to the same period, as discussed below.

Current wording

Noninterest income was up $2.3 million, or 28.8%, for the six months ended June 30, 2026 over the same time frame in 2025. Customer service fees increased by $316 thousand as compared to the six months ended June 30, 2025 which was due primarily to increases of $102 thousand in both miscellaneous customer service fees and mortgage release fees and $49 thousand in merchant service referral fees. Other service fees increased by $254 thousand compared to the same period in 2025, which includes overdraft and returned check fees of $138 thousand and combined service charges on DDA, savings accounts, ATM and miscellaneous of $107 thousand. Interchange income increased $180 thousand, which included an additional $58 thousand received for support fees from Mastercard. Loan servicing income increased $293 thousand which included increased servicing rights income for 1-4 family real estate loans of $201 thousand and $45 thousand for those associated with agricultural real estate loans as compared to the same period in 2025.

Previous wording

The loss on available for sale securities was $347 thousand for the quarter ended March 31, 2026. Management estimates that this loss is expected to be recouped over the next 30.55 months. By sacrificing this short term loss for overall long term gain, the security portfolio will move in a stronger direction, faster. Also, decreasing the number of holdings will create additional operating efficiencies.

Current wording

The loss on available for sale securities was $347 thousand for the quarter ended March 31, 2026. Management estimates that this loss is expected to be recouped over the next 30.55 months, as the sale proceeds were redeployed into purchases of higher yielding securities.

Previous wording

For the three months ended March 31, 2026, noninterest expenses were $1.0 million or 5.5% higher than for the same period in 2025. Salaries and wages, including normal merit increases, restricted stock expense and incentive payouts, increased $389 thousand in total. Of the total, base wages increased $294 thousand, offsetting deferred salary loans costs increased $17 thousand from last year, restricted stock expense decreased $21 thousand and incentive expense increased $133 thousand compared to 2025. Benefits decreased from 2025 by $25 thousand due to decreased medical expense of $65 thousand and increased combined taxes and workmen's compensation of $62 thousand along with decreased pension expense of $17 thousand. Furniture and equipment increased in total $288 thousand, which was primarily due to an increase in maintenance contracts.

Current wording

For the six months ended June 30, 2026, noninterest expenses were $1 million or 2.7% higher than for the same period in 2025. Salaries and wages, including normal merit increases, restricted stock expense and higher incentive payouts, increased $1.2 million in total. Of the total, base wages and incentive expense increased $632 and $625 thousand, respectively, and was offset with increased deferred salary loans costs of $24 thousand and decreased restricted stock expense of $30 thousand as compared to 2025. Benefits increased from 2025 by $48 thousand due to increased combined taxes and workmen's compensation of $83 thousand and additional pension expense of $67 thousand offset with a reduction in medical expense of $85 thousand.

Previous wording

Consulting fees decreased $491 thousand over the same period in 2025 attributable to non-recurring fees related to assistance with negotiations for the data processing contract. Data processing expenses and ATM expense increased a combined $522 thousand. First quarter 2026 included a smaller amount of flex credits utilized as compared to first quarter 2025. General and administrative expense increased $207 thousand. The items on this line of significance include an increase in charitable contributions of $65 thousand, an increase of miscellaneous expenses of $130 thousand which included $126 thousand for the Modified Endowment Contract (MEC) penalty owed on the gain on cash surrender of bank owned life insurance policies, an increase in postage of $35 thousand and increased CDARS/ICS fees of $22 thousand. NSF check losses and fraud decreased $65 thousand from 2025.

Current wording

FDIC assessments decreased $128 thousand in 2026 from 2025 due to a decrease in the quarterly assessment multiplier. Servicing rights amortization included $396 thousand for impairment of agricultural loan servicing rights in the six months ended June 30,2026. Loan expense included a one-time payment of $169 thousand related to an acquired loan during the second quarter of 2026. Consulting fees decreased $660 thousand over the same period in 2025 and is primarily attributable to lower non-recurring fees related to assistance with negotiations for the data processing contract and time spent on additional ancillary products related to our core banking operating system. Of the $136 thousand decrease in professional fees, $96 thousand was attributed to reduced auditing and exam expenses in 2026 as compared to 2025. The decrease of $280 thousand in intangible asset amortization was due to the Bank of Geneva core deposit intangible being fully amortized at the end of 2025. General and administrative expense decreased $137 thousand. The items on this line of significance include an increase in charitable contributions of $72 thousand, a decrease of miscellaneous expenses of $74 thousand which included $126 thousand for the Modified Endowment Contract (MEC) penalty owed on the gain on cash surrender of bank owned life insurance policies in first quarter 2026, an increase in postage of $76 thousand and increased CDARS/ICS fees of $42 thousand. Travel and entertainment increased $39 and $28 thousand, respectively, in the first six months of 2026 as compared to the same period in 2025. Debit card losses and NSF check losses and fraud decreased $96 and $82 thousand, respectively, from 2025.

Previous wording

Income tax expense was $949 thousand higher for the three months ended March 31, 2026 compared to the same period in 2025 based mainly on pretax higher earnings of $3.6 million in addition to a taxable $1.3 million gain on cash surrender value of bank owned life insurance policies. Amortization of qualified affordable housing projects caused income tax expense to increase $112 thousand for both the three months ended March 31, 2026 and 2025, as presented in Note 8. Effective tax rates were 22.35% and 20.64% for 2026 and 2025, respectively. Excluding the additional $112 thousand of income tax expense for both periods, the effective tax rates would have been 21.44% and 19.36% for the three months ended March 31, 2026 and 2025, respectively.

Current wording

Income tax expense was $1.9 million higher for the six months ended June 30, 2026 compared to the same period in 2025 based mainly on pretax higher earnings of $8.6 million in addition to a taxable $1.3 million gain on cash surrender value of bank owned life insurance policies. Amortization of qualified affordable housing projects caused income tax expense to increase $224 thousand for both the six months ended June 30, 2026 and 2025, as presented in Note 8. Effective tax rates were 21.13% and 20.57% for 2026 and 2025, respectively. Excluding the additional $224 thousand of income tax expense for both periods, the effective tax rates would have been 20.30% and 19.35% for the six months ended June 30, 2026 and 2025, respectively.