FINANCIAL INSTITUTIONS INC
For the period ended Jun 30, 2026. Filed Aug 3, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 3, 2026
FISI$39.73+0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-04.
0001193125-26-203962
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-03.
0001193125-26-330542
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 208 previous paragraphs and 218 current paragraphs.
150 unchanged; 50 reworded; 14 added; 8 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 18 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Summary of 2026 Second Quarter Results
Current report
Net interest margin expanded to 3.70% for the second quarter of 2026 compared to 3.49% for the second quarter of 2025. The yield on interest-earnings assets was 5.76% for the second quarter of 2026, compared to 5.88% for the second quarter of 2025, while the cost of interest-bearing liabilities was 2.61%, reflecting a decrease of 39 basis points from the second quarter of 2025.
Current report
Noninterest expense remained relatively flat at $35.6 million in the second quarter of 2026, compared to $35.7 million in the second quarter of 2025. Refer to the “Noninterest Expense” section of this Management’s Discussion and Analysis for further discussion regarding these variances.
Current report
Our efficiency ratio improved to 55.33% for the second quarter of 2026, compared to 59.68% for the second quarter of 2025, reflecting both strong revenue generation and disciplined expense management.
Current report
Analysis of Net Interest Income and Net Interest Margin for the Six Months Ended June 30, 2026 and 2025
Current report
For the six months ended June 30, 2026, the average yield on average interest earning assets of 5.76% was 8-basis points lower than the six months ended June 30, 2025 of 5.84%. The average yield on Federal Reserve interest-earning cash decreased 57-basis points during the six months ended June 30, 2026 to 3.75%, decreasing interest income by $141 thousand, while average loan yield decreased 16-basis points during the six months ended June 30, 2026 to 6.07% from 6.23% for the six months ended June 30, 2025, decreasing net interest income $3.5 million, while the average yield on investment securities increased 17-basis points during the six months ended June 30, 2026 to 4.47%, resulting in an $881 thousand increase in interest income.
Current report
Average interest-earning assets were $5.76 billion for the six months ended June 30, 2026 compared to $5.65 billion for the six months ended June 30, 2025, an increase of $104.1 million. The increase was primarily due to an increase of average loans of $142.1 million to $4.66 billion for the six months ended June 30, 2026 from $4.52 billion for the six months ended June 30, 2025, partially offset by a $26.0 million decrease in average Federal Reserve interest-earning cash, and a decrease in average investment securities of $12.0 million from $1.08 billion for the six months ended June 30, 2025 to $1.07 billion for the six months ended June 30, 2026. Average loans comprised 81% of average interest-earning assets during the six months ended June 30, 2026 compared to 80% during the six months ended June 30, 2025. The increase in average loans was primarily due to organic growth in commercial mortgages and resulted in a $4.2 million increase in interest income.
Current report
For the six months ended June 30, 2026, the average cost of interest-bearing liabilities of 2.63% was 40-basis points lower than the six months ended June 30, 2025 of 3.03%. The average cost of interest-bearing deposits of 2.55% was 45-basis points lower than the six months ended June 30, 2025, primarily due to the continued repricing of deposits at lower rates, which decreased interest expense by $10.3 million. The average cost of total borrowings increased 63-basis points to 4.44% in the six months ended June 30, 2026, compared to 3.81% in the six months ended June 30, 2025, which increased interest expense $1.2 million.
Current report
Average interest-bearing liabilities of $4.54 billion for the six months ended June 30, 2026 were $24.0 million higher than the six months ended June 30, 2025. On average, interest-bearing deposits increased $29.5 million from $4.30 billion for the six months ended June 30, 2025 to $4.33 billion for the six months ended June 30, 2026, and noninterest-bearing demand deposits (a principal component of net free funds) increased $22.3 million to $947.3 million for the six months ended June 30, 2026. The modest increase in average interest-bearing deposits was primarily due to an increase in average time deposits. For further discussion of deposits, refer to the “Funding Activities–Deposits” section of this Management’s Discussion and Analysis.
Current report
(3)Annualized.
Current report
Total noninterest income increased $337 thousand, or 3.2%, for the second quarter of 2026, compared to the second quarter of 2025. For the six months ended June 30, 2026, total noninterest income increased $637 thousand, or 3.0%, compared to the six months ended June 30, 2025. Detail on select categories with notable variances follows.
Current report
Investment advisory income of $3.3 million for the second quarter of 2026 increased $402 thousand, or 14%, compared to $2.9 million for the second quarter of 2025. Investment advisory income for the six months ended June 30, 2026 increased $726 thousand to $6.3 million, compared to $5.6 million for the six months ended June 30, 2025. The increase for both periods reflected new business and market-driven gains, as Courier Capital’s assets under management increased to $4.02 billion as of June 30, 2026.
Current report
Total noninterest expense of $35.6 million for the second quarter of 2026 was flat compared to the second quarter of 2025. For the six months ended June 30, 2026, total noninterest expense of $71.2 million increased $1.8 million, or 3%, compared to $69.4 million for the six months ended June 30, 2025. Detail on select categories with notable variances follows.
Current report
FDIC assessments expense decreased $405 thousand, or 29%, to $987 thousand for the second quarter of 2026, compared to $1.4 million for the second quarter of 2025, and decreased $886 thousand, or 31%, for the first six months of 2026 to $2.0 million for the comparable period of 2025. FDIC assessment expense was higher for both periods in 2025, reflecting the impact of the deposit-related fraud loss we experienced in March 2024.
Removed paragraphs (8)
Previous report
Summary of 2026 First Quarter Results
Previous report
Net interest margin was 3.67% for the first quarter of 2026 compared to 3.35% in the first quarter of 2025, primarily driven by lower interest-bearing liability costs.
Previous report
Noninterest expense totaled $35.6 million in the first quarter of 2026, compared to $33.7 million in the first quarter of 2025. The increase in noninterest expense for the first quarter of 2026 was primarily attributable to a $1.7 million increase in salaries and employee benefits, a $724 thousand increase in computer and data processing expenses, and a $403 thousand increase in deposit-related charged-off items, partially offset by a $546 thousand decrease in other noninterest expense, and a $341 thousand decrease in professional services expense. Refer to the “Noninterest Expense” section of this Management’s Discussion and Analysis for further discussion regarding these variances.
Previous report
Investment advisory income of $3.1 million for the first quarter of 2026 increased $324 thousand, or 12%, compared to $2.7 million for the first quarter of 2025, reflecting both new business and market-driven gains.
Previous report
Professional services expense decreased $341 thousand, or 20%, to $1.4 million for the first quarter of 2026 compared to $1.7 million for the first quarter of 2025. The decline was primarily due to lower audit-related expenses and lower other professional and consulting fees.
Previous report
Computer and data processing expense increased $724 thousand, or 13%, to $6.2 million for the first quarter of 2026, compared to $5.5 million for the first quarter of 2025. The increase was due in part to the termination of a vendor relationship during the first quarter of 2026.
Previous report
Deposit-related charged-off items expense was $109 thousand for the first quarter of 2026, compared to deposit-related recoveries of $294 thousand for the first quarter of 2025. The recoveries in the first quarter of 2025 were primarily related to insurance proceeds related to a post commercial deposit charged-off item.
Previous report
Other expense decreased $546 thousand, or 12%, to $3.9 million for the first quarter of 2026, compared to $4.4 million for the first quarter of 2025. The decline was primarily attributed to lower corporate insurance premiums and a reduction in bank charges associated with swap collateral accounts due to lower interest rates.
Reworded paragraphs (50)
Previous wording
We will continue to explore market expansion opportunities that complement current market areas as opportunities arise. Our primary focus is on organic growth, as well as evaluating potential growth opportunities within our non-interest income line of business by acquiring business that can be incorporated into existing operations. While organic growth remains our primary focus, we beleive our capital position remains strong enough to support selective merger and acquisition activity in support of expansion of our core financial service businesses. Consequently, we will contine to evaluate acquisition opportunities in these activities. When evaluating acquisition opportunities, we will balance the potential for earnings accretion with maintaining adequate capital levels, which could result in our common stock being the predominant form of consideration and/or the need for us to raise capital.
Current wording
We will continue to explore market expansion opportunities that complement current market areas as opportunities arise. Our primary focus is on organic growth, as well as evaluating potential growth opportunities within our non-interest income line of business by acquiring business that can be incorporated into existing operations. While organic growth remains our primary focus, we believe our capital position remains strong enough to support selective merger and acquisition activity in support of expansion of our core financial service businesses. Consequently, we will continue to evaluate acquisition opportunities in these activities. When evaluating acquisition opportunities, we will balance the potential for earnings accretion with maintaining adequate capital levels, which could result in our common stock being the predominant form of consideration and/or the need for us to raise capital.
Previous wording
Net income increased $4.1 million to $21.0 million for the first quarter of 2026 compared to $16.9 million for the first quarter of 2025. Net income available to common shareholders for the first quarter of 2026 was $20.6 million, or $1.04 per diluted share, compared with $16.5 million, or $0.81 per diluted share, for the first quarter of 2025. Return on average common equity was 13.57% and return on average assets was 1.37% for the first quarter of 2026 compared to 11.92% and 1.10%, respectively, for the first quarter of 2025.
Current wording
Net income increased $3.7 million to $21.2 million for the second quarter of 2026 compared to $17.5 million for the second quarter of 2025. Net income available to common shareholders for the second quarter of 2026 was $20.8 million, or $1.04 per diluted share, compared with $17.2 million, or $0.85 per diluted share, for the second quarter of 2025.
Previous wording
Net interest income totaled $52.0 million in the first quarter of 2026, an increase of $5.1 million compared to $46.9 million in the first quarter of 2025. Average interest-earning assets for the first quarter of 2026 were $73.3 million higher than the first quarter of 2025 primarily due to a $145.1 million increase in average loans, partially offset by a $41.5 million decrease in the average balance of Federal Reserve interest-earning cash and a $30.3 million decrease in average investment securities. Average interest-bearing liabilities for the first quarter of 2026 were $6.7 million higher than the first quarter of 2025 primarily due to a $118.2 million increase in average time deposits and a $12.9 million increase in average short-term borrowings, partially offset by a $70.0 million decrease in average savings and money market account deposits, a $28.8 million decrease in average interest-bearing demand deposits, and a $25.6 million decrease in average long-term borrowings. The wind-down of the Banking-as-a-Service (“BaaS”) platform that the Bank initiated in September 2024 was the primary driver of the reduction in average savings and money market deposits.
Current wording
Net interest income totaled $53.4 million in the second quarter of 2026, an increase of $4.2 million compared to $49.1 million in the second quarter of 2025. Average interest-earning assets for the second quarter of 2026 were $134.5 million higher than the second quarter of 2025 primarily due to a $139.2 million increase in the average balance of loans and a $6.0 million increase in average investment securities, partially offset by a $10.7 million decrease in the average balance of Federal Reserve interest-earning cash. Average interest-bearing liabilities for the second quarter of 2026 were $41.1 million higher than the second quarter of 2025 primarily due to a $39.6 million increase in the average balance of total deposits, and a $39.2 million increase in average short-term borrowings, partially offset by a $37.8 million decrease in average long-term borrowings.
Previous wording
The provision for credit losses was $2.2 million in the first quarter of 2026 compared to $2.9 million in the first quarter of 2025. Net charge-offs during the recent quarter were $5.1 million, representing 0.44% of average loans on an annualized basis, compared to $2.4 million, or an annualized 0.21% of average loans, in the first quarter of 2025. See the “Provision for Credit Losses,” “Allowance for Credit Losses–Loans” and “Non-Performing Assets and Potential Problem Loans” sections of this Management’s Discussion and Analysis for further discussion regarding the provision for credit losses and net charge-offs.
Current wording
The provision for credit losses was $3.1 million in the second quarter of 2026 compared to $2.6 million in the second quarter of 2025. Net charge-offs during the recent quarter were $1.3 million, representing 0.11% of average loans on an annualized basis, compared to $4.1 million, or an annualized 0.36% of average loans, in the second quarter of 2025. See the “Provision for Credit Losses,” “Allowance for Credit Losses–Loans” and “Non-Performing Assets and Potential Problem Loans” sections of this Management’s Discussion and Analysis for further discussion regarding the provision for credit losses and net charge-offs.
Previous wording
Noninterest income totaled $10.7 million in the first quarter of 2026, compared to $10.4 million in the first quarter of 2025. The increase primarily consisted of a $328 thousand net gain on sale of securities, and an increase of $324 thousand from investment advisory income, partially offset by a $481 thousand net loss on the sale of other assets, and a $191 thousand decrease in investment in limited partnership income. Refer to the “Noninterest Income” section of this Management’s Discussion and Analysis for further discussion regarding these variances.
Current wording
Noninterest income totaled $11.0 million in the second quarter of 2026, compared to $10.6 million in the second quarter of 2025. The 3.2% increase was primarily due to an increase in investment advisory fee income, as the assets under management of Courier Capital surpassed $4.0 billion as of June 30, 2026. Refer to the “Noninterest Income” section of this Management’s Discussion and Analysis for further discussion regarding these variances.
Previous wording
The regulatory Tier 1 Capital Ratio was 11.70% and 11.43%, respectively, and Total Risk-Based Capital Ratio was 14.16% and 14.90%, respectively, at March 31, 2026 and December 31, 2025. See the “Liquidity and Capital Management” section of this Management’s Discussion and Analysis for further discussion regarding regulatory capital and the Basel III capital rules.
Current wording
The regulatory Tier 1 Capital Ratio of the Company was 11.76% and 11.43%, respectively, and Total Risk-Based Capital Ratio was 14.20% and 14.90%, respectively, at June 30, 2026 and December 31, 2025. See the “Liquidity and Capital Management” section of this Management’s Discussion and Analysis for further discussion regarding regulatory capital and the Basel III capital rules.
Previous wording
Net interest income is our primary source of revenue, comprising approximately 83% of revenue during the first quarter of 2026 and 82% of revenue during the first quarter of 2025. Net interest income is the difference between interest income on interest-earning assets, such as loans and investment securities, and interest expense on interest-bearing deposits and other borrowings used to fund interest-earning and other assets or activities. Net interest income is affected by changes in interest rates and by the amount and composition of interest-earning assets and interest-bearing liabilities, as well as the sensitivity of the balance sheet to changes in interest rates, including characteristics such as the fixed or variable nature of the financial instruments, contractual maturities and repricing frequencies.
Current wording
Net interest income is our primary source of revenue, comprising approximately 83% of revenue during the second quarter of 2026 and 82% of revenue during the second quarter of 2025. Net interest income is the difference between interest income on interest-earning assets, such as loans and investment securities, and interest expense on interest-bearing deposits and other borrowings used to fund interest-earning and other assets or activities. Net interest income is affected by changes in interest rates and by the amount and composition of interest-earning assets and interest-bearing liabilities, as well as the sensitivity of the balance sheet to changes in interest rates, including characteristics such as the fixed or variable nature of the financial instruments, contractual maturities and repricing frequencies.
Previous wording
Analysis of Net Interest Income and Net Interest Margin
Current wording
Analysis of Net Interest Income and Net Interest Margin for the Three Months Ended June 30, 2026 and 2025
Previous wording
Net interest income on a taxable equivalent basis for the first quarter of 2026, was $52.0 million, an increase of $5.1 million versus the comparable quarter last year of $46.9 million. Net interest margin for the first quarter of 2026 was 3.67%, 32-basis points higher than 3.35% for the same period in 2025. This increase was a function of a 38-basis points increase in the net interest spread, partially offset by a 6-basis point lower contribution from net free funds. The increase in interest rate spread was comprised of a 4-basis points decrease in the average yield of average interest-earning assets, and a 42-basis points decrease in the average cost of interest-bearing liabilities.
Current wording
Net interest income on a taxable equivalent basis for the second quarter of 2026, was $53.4 million, an increase of $4.2 million versus the comparable quarter last year of $49.2 million. Net interest margin for the second quarter of 2026 was 3.70%, 21-basis points higher than 3.49% for the same period in 2025. This increase was a function of a 27-basis points increase in the net interest spread, partially offset by a 6-basis point lower contribution from net free funds. The increase in interest rate spread was comprised of a 39-basis points decrease in the average cost of interest-bearing liabilities, partially offset by a 12-basis points decrease in the average yield of interest-earning assets.
Previous wording
For the first quarter of 2026, the average yield on average interest earning assets of 5.76% was 4-basis points lower than the first quarter of 2025 of 5.80%. The average yield on federal reserve interest-earning cash decreased 58-basis points during the first quarter of 2026 to 3.79%, decreasing interest income by $92 thousand, and average loan yield decreased 13-basis points during the first quarter of 2026 to 6.07% from 6.20% for the first quarter of 2025, decreasing net interest income $1.4 million, while the average yield on investment securities increased 23-basis points during the first quarter of 2026 to 4.48%, resulting in a $586 thousand increase in interest income.
Current wording
For the second quarter of 2026, the average yield on average interest earning assets of 5.76% was 12-basis points lower than the second quarter of 2025 of 5.88%. The average yield on Federal Reserve interest-earning cash decreased 51-basis points during the second quarter of 2026 to 3.70%, decreasing interest income by $47 thousand, and average loan yield decreased 19-basis points during the second quarter of 2026 to 6.07% from 6.26% for the second quarter of 2025, decreasing net interest income $2.1 million, while the average yield on investment securities increased 12-basis points during the second quarter of 2026 to 4.46%, resulting in a $296 thousand increase in interest income.
Previous wording
Average interest-earning assets were $5.72 billion for the first quarter of 2026 compared to $5.65 billion for the first quarter of 2025, an increase of $73.3 million from the comparable quarter last year. The increase was primarily due to an increase of average loans of $145.1 million from $4.49 billion for the first quarter of 2025 to $4.64 billion for the first quarter of 2026, partially offset by a decrease in average investment securities of $30.3 million from $1.09 billion for the first quarter of 2025 to $1.06 billion for the first quarter of 2026, and a $41.5 million decrease in average Federal Reserve interest-earning cash. Average loans comprised 81% of average interest-earning assets during the first quarter of 2026 compared to 80% during the first quarter of 2025. The increase in average loans was primarily due to organic growth in commercial mortgages and resulted in a $2.1 million increase in interest income.
Current wording
Average interest-earning assets were $5.79 billion for the second quarter of 2026 compared to $5.65 billion for the second quarter of 2025, an increase of $134.5 million from the comparable quarter last year. The increase was primarily due to an increase of average loans of $139.2 million from $4.54 billion for the second quarter of 2025 to $4.68 billion for the second quarter of 2026, and an increase in average investment securities of $6.0 million from $1.07 billion for the second quarter of 2025 to $1.08 billion for the second quarter of 2026, partially offset by a $10.7 million decrease in average Federal Reserve interest-earning cash. Average loans comprised 81% of average interest-earning assets during the second quarter of 2026 compared to 80% during the second quarter of 2025. The increase in average loans was primarily due to organic growth in commercial mortgages and resulted in a $2.0 million increase in interest income.
Previous wording
For the first quarter of 2026, the average cost of average interest-bearing liabilities of 2.65% was 42-basis points lower than the first quarter of 2025 of 3.07%. The average cost of interest-bearing deposits of 2.56% was 48-basis points lower than the first quarter of 2025, primarily due to the continued repricing of deposits at lower rates, which decreased interest expense by $5.6 million. The average cost of total borrowings increased 76-basis points to 4.47% in the first quarter of 2026, compared to 3.71% in the first quarter of 2025, which decreased interest expense $577 thousand.
Current wording
For the second quarter of 2026, the cost of average interest-bearing liabilities of 2.61% was 39-basis points lower than the second quarter of 2025 of 3.00%. The average cost of interest-bearing deposits of 2.53% was 43-basis points lower than the second quarter of 2025, primarily due to the continued repricing of deposits at lower rates, which decreased interest expense by $4.8 million. The average cost of total borrowings increased 51-basis points to 4.31% in the second quarter of 2026, compared to 3.80% in the second quarter of 2025, which increased interest expense $620 thousand.
Previous wording
Average interest-bearing liabilities of $4.51 billion for the first quarter of 2026 were generally flat with the first quarter of 2025. On average, interest-bearing deposits increased $19.3 million from $4.29 billion for the first quarter of 2025 to $4.31 billion for the current quarter, and noninterest-bearing demand deposits (a principal component of net free funds) increased $23.9 million to $950.6 million for the first quarter of 2026. The modest increase in average interest-bearing deposits was primarily due to an increase in average time deposits. Compared to the year-ago period, the BaaS platform wind-down that the Bank initiated in September 2024 was the primary driver of the reduction in average savings and money market deposits. For further discussion of deposits, refer to the “Funding Activities–Deposits” section of this Management’s Discussion and Analysis.
Current wording
Average interest-bearing liabilities of $4.56 billion for the second quarter of 2026 were generally flat with the second quarter of 2025. On average, interest-bearing deposits increased $39.6 million from $4.32 billion for the second quarter of 2025 to $4.36 billion for the current quarter, and noninterest-bearing demand deposits (a principal component of net free funds) increased $20.6 million to $944.0 million for the second quarter of 2026. The increase in average interest-bearing deposits was primarily due to an increase in average time deposits. For further discussion of deposits, refer to the “Funding Activities–Deposits” section of this Management’s Discussion and Analysis.
Previous wording
The following table sets forth certain information relating to the consolidated balance sheets and reflects the average yields earned on interest-earning assets, as well as the average rates paid on interest-bearing liabilities for the periods indicated (dollars in thousands). Average balances were derived from daily balances.
Current wording
The following tables set forth certain information relating to the consolidated balance sheets and reflects the average yields earned on interest-earning assets, as well as the average rates paid on interest-bearing liabilities for the periods indicated (dollars in thousands). Average balances were derived from daily balances.
Previous wording
(4) Loans include net unearned income, net deferred loan fees and costs and non-accruing loans. Net deferred loan fees (costs) included in interest income were as follows (in thousands):
Current wording
(4)Loans include net unearned income, net deferred loan fees and costs and non-accruing loans. Net deferred loan fees (costs) included in interest income were as follows (in thousands):
Previous wording
The provision for credit losses in the first quarter of 2026 was driven by a combination of factors, including the impact of loan mix and change in outstandings, coupled with the overall decrease in the both the forecasted loss rate for pooled loans and qualitative factors that are primarily qualitatively informed by historical rates.
Current wording
The provision for credit losses for the three and six months ended June 30, 2026 was driven by a combination of factors, including the impact of an increase in loan outstandings and higher qualitative factors, partially offset by a decrease in loss rate for pooled loans and fluctuations in unfunded commitments.
Previous wording
Income from investments in limited partnerships of $224 thousand for the first quarter of 2026, decreased $191 thousand, compared to $415 thousand for the first quarter of 2025. Income from our investments in limited partnerships fluctuates based on the maturity and performance of the underlying investments.
Current wording
A loss on investments in limited partnerships of $140 thousand was recognized for the second quarter of 2026, compared to income of $307 thousand for the second quarter of 2025. Income from our investments in limited partnerships fluctuates based on the maturity and performance of the underlying investments.
Previous wording
Net loss on sale of other assets of $481 thousand for the first quarter of 2026 comprised of the net loss on the write-down of two branch locations that were held for sale as of March 31, 2026.
Current wording
The net loss on other assets of $454 thousand for the six months ended June 30, 2026 included the net loss on the write-down of two branch locations that were moved to held for sale in the first quarter of 2026.
Previous wording
Salaries and employee benefits expense increased $1.7 million, or 10%, to $18.6 million for the first quarter of 2026, compared to $16.9 million for the first quarter of 2025, reflecting a combination of factors, including annual merit increases, incentive compensation and investments in personnel.
Current wording
Salaries and employee benefits expense increased $1.1 million, or 6%, to $19.2 million for the second quarter of 2026, compared to $18.1 million for the second quarter of 2025. For the first six months of 2026, salaries and employee benefit expense increased $2.8 million, or 8%, to $37.8 million, compared to $35.0 million for the six months ended June 30, 2025. The increases in both periods reflected a combination of factors, including annual merit increases, increased incentive compensation and investments in personnel, partially offset by lower medical claims incurred in the current periods compared to the prior year.
Previous wording
Our efficiency ratio for the first quarter of 2026 was 57.06%, compared with 58.79% for the first quarter of 2025. The efficiency ratio is calculated by dividing total noninterest expense by net revenue, defined as the sum of tax-equivalent net interest income and noninterest income before net gains on investment securities. An increase in the efficiency ratio indicates that more resources are being utilized to generate the same volume of income, while a decrease indicates a more efficient allocation of resources. The efficiency ratio, a banking industry financial measure, is not required by GAAP. However, the efficiency ratio is used by management in its assessment of financial performance specifically as it relates to noninterest expense control. Management also believes such information is useful to investors in evaluating Company performance.
Current wording
Our efficiency ratio for the second quarter of 2026 was 55.33%, compared with 59.68% for the second quarter of 2025, and our efficiency ratio for the six months ended June 30, 2026 was 56.18%, compared with 59.24% for the comparable period in 2025. The efficiency ratio is calculated by dividing total noninterest expense by net revenue, defined as the sum of tax-equivalent net interest income and noninterest income before net gains on investment securities. An increase in the efficiency ratio indicates that more resources are being utilized to generate the same volume of income, while a decrease indicates a more efficient allocation of resources. The efficiency ratio, a banking industry financial measure, is not required by GAAP. However, the efficiency ratio is used by management in its assessment of financial performance specifically as it relates to noninterest expense control. Management also believes such information is useful to investors in evaluating Company performance.
Previous wording
For the first quarter of 2026, we recorded income tax expense of $3.8 million, compared to $3.7 million for the first quarter of 2025. In the first quarter of 2026, we recognized federal and state tax benefits related to tax credit investments placed in service and/or amortized during the period resulting in a reduction in income tax expense of $1.0 million, compared to $1.1 million for the same period in the prior year.
Current wording
For the second quarter of 2026, we recorded income tax expense of $4.4 million, compared to $4.0 million for the second quarter of 2025, and $8.3 million for the six months ended June 30, 2026, compared to $7.7 million for the six months ended June 30, 2025. In the second quarter of 2026, we recognized federal and state tax benefits related to tax credit investments placed in service and/or amortized during the period resulting in a reduction in income tax expense of $1.0 million, compared to $1.1 million for the same period in the prior year. The first six months of 2026 and 2025 also included related tax credit benefits of $2.1 million and $2.2 million, respectively.
Previous wording
Our effective tax rate for the first quarter of 2026 was 15.5%, versus 18.2%, for the first quarter of 2025. The effective tax rate typically fluctuates on a quarterly basis primarily due to the level of pre-tax earnings, and may differ from statutory rates due to the impact of items of income and expense that are not subject to federal or state taxation. Our effective tax rates reflect the impact of these items, which include, but are not limited to, interest income from tax-exempt securities, earnings on company owned life insurance and the impact of tax credit investments. In addition, our effective tax rates for 2026 and 2025 reflect the New York State tax benefit generated by our real estate investment trust.
Current wording
Our effective tax rate for the second quarter of 2026 was 17.3%, versus 18.4%, for the second quarter of 2025, and 16.4% for the six months ended June 30, 2026, compared to 18.3% for the six months ended June 30, 2025. The effective tax rate typically fluctuates on a quarterly basis primarily due to the level of pre-tax earnings, and may differ from statutory rates due to the impact of items of income and expense that are not subject to federal or state taxation. Our effective tax rates reflect the impact of these items, which include, but are not limited to, interest income from tax-exempt securities, earnings on company owned life insurance and the impact of tax credit investments. In addition, our effective tax rates for 2026 and 2025 reflect the New York State tax benefit generated by our real estate investment trust.
Previous wording
Our available for sale (“AFS”) investment securities portfolio increased $81.2 million from December 31, 2025 to March 31, 2026. The AFS portfolio had a net unrealized loss of $44.0 million at March 31, 2026 and $35.7 million at December 31, 2025, respectively. The fair value of most of the investment securities in the AFS portfolio fluctuates as market interest rates change.
Current wording
Our available for sale (“AFS”) investment securities portfolio decreased $12.0 million from December 31, 2025 to June 30, 2026. The AFS portfolio had a net unrealized loss of $49.2 million at June 30, 2026, which consisted of a $52.5 million unrealized loss and a $3.3 million unrealized gain, and a net unrealized loss of $35.7 million at December 31, 2025, which consisted of a $46.3 million unrealized loss and a $10.6 million unrealized gain. The fair value of most of the investment securities in the AFS portfolio fluctuates as market interest rates change.
Previous wording
As of March 31, 2026, there were 66 securities in the AFS portfolio with an aggregate fair value of $404.4 million that were in an unrealized loss position with unrealized losses totaling $48.8 million. Of these, 35 were Agency MBS in an unrealized loss position for 12 months or longer and had an aggregate fair value of $200.0 million and unrealized losses of $44.4 million, while 31 were in an unrealized loss position for less than 12 months and had an aggregate fair value of $204.3 million and unrealized losses of $4.4 million. The unrealized loss of these securities was driven by the timing of the purchases of fixed-rate securities during the extended low-interest rate environments experienced in prior years, which has been compounded with subsequent increases in benchmark interest rates. However, these fixed-rate securities were purchased with the expectation that they will continue to prepay principal, and the proceeds will be invested at current market rates.
Current wording
As of June 30, 2026, there were 59 Agency MBS securities in the AFS portfolio with an aggregate fair value of $510.2 million that were in an unrealized loss position with unrealized losses totaling $52.0 million. Of these, 40 were Agency MBS in an unrealized loss position for 12 months or longer and had an aggregate fair value of $272.1 million and unrealized losses of $49.2 million, while 19 were in an unrealized loss position for less than 12 months and had an aggregate fair value of $238.1 million and unrealized losses of $2.8 million. The unrealized loss of these securities was driven by the timing of the purchases of fixed-rate securities during the extended low-interest rate environments experienced in prior years, which has been compounded with subsequent increases in benchmark interest rates. However, these fixed-rate securities were purchased with the expectation that they will continue to prepay principal, and the proceeds will be invested at current market rates.
Previous wording
We also hold subordinated debt of bank holding companies with a maturity of 10 years, with a call in 5 years. As of March 31, 2026, there were 14 corporate bonds with an aggregate fair value of $31.5 million, in an unrealized loss position for less than 12 months of $459 thousand.
Current wording
We also hold subordinated debt of bank holding companies with a maturity of 10 years, with a call in 5 years. As of June 30, 2026, there were 15 corporate bonds with an aggregate fair value of $34.5 million, in an unrealized loss position for less than 12 months of $424 thousand.
Previous wording
As a member of the FHLB, the Bank is required to hold FHLB stock. The amount of required FHLB stock is based on the Bank’s asset size and the amount of borrowings from the FHLB. We have assessed the ultimate recoverability of our FHLB stock and believe that no impairment currently exists. As a member of the FRB system, we are required to maintain a specified investment in FRB stock based on a ratio relative to our capital. At March 31, 2026, our ownership of FHLB and FRB stock totaled $10.6 million and $9.2 million, respectively, and is included in other assets and recorded at cost, which approximates fair value.
Current wording
As a member of the FHLB, the Bank is required to hold FHLB stock. The amount of required FHLB stock is based on the Bank’s asset size and the amount of borrowings from the FHLB. We have assessed the ultimate recoverability of our FHLB stock and believe that no impairment currently exists. As a member of the FRB system, we are required to maintain a specified investment in FRB stock based on a ratio relative to our capital. At June 30, 2026, our ownership of FHLB and FRB stock totaled $14.0 million and $9.2 million, respectively, and is included in other assets and recorded at cost, which approximates fair value.
Previous wording
For AFS securities in an unrealized loss position, we first assess whether (i) we intend to sell, or (ii) it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either case is affirmative, any previously recognized allowances are charged-off and the security’s amortized cost is written down to fair value through income. If neither case is affirmative, the security is evaluated to determine whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and any adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Adjustments to the allowance are reported in our income statement as a component of credit loss expense. AFS securities are charged-off against the allowance or, in the absence of any allowance, written down through income when deemed uncollectible by management or when either of the aforementioned criteria regarding intent or requirement to sell is met. For the three months ended March 31, 2026 and 2025, no allowance for credit losses was recognized on AFS securities in an unrealized loss position as management does not believe any of the securities are impaired due to reasons of credit quality.
Current wording
For AFS securities in an unrealized loss position, we first assess whether (i) we intend to sell, or (ii) it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either case is affirmative, any previously recognized allowances are charged-off and the security’s amortized cost is written down to fair value through income. If neither case is affirmative, the security is evaluated to determine whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and any adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Adjustments to the allowance are reported in our income statement as a component of credit loss expense. AFS securities are charged-off against the allowance or, in the absence of any allowance, written down through income when deemed uncollectible by management or when either of the aforementioned criteria regarding intent or requirement to sell is met. For the three and six months ended June 30, 2026 and 2025, no allowance for credit losses was recognized on AFS securities in an unrealized loss position as management does not believe any of the securities are impaired due to reasons of credit quality.
Previous wording
Total loans were $4.63 billion at March 31, 2026, a decrease of $30.3 million from $4.66 billion at December 31, 2025. The composition of our loan portfolio, excluding loans held for sale and including net unearned income and net deferred fees and costs, is summarized as follows (dollars in thousands):
Current wording
Total loans were $4.75 billion at June 30, 2026, an increase of $95.1 million from $4.66 billion at December 31, 2025. The composition of our loan portfolio, excluding loans held for sale and including net unearned income and net deferred fees and costs, is summarized as follows (dollars in thousands):
Previous wording
Total commercial loans of $3.08 billion represented 67% of total loans as of March 31, 2026, compared to $3.08 billion, or 66% of total loans as of December 31, 2025. Commercial business loans of $746.4 million, or 16% of total loans, were up $8.1 million, or 1%, from December 31, 2025, primarily due to organic growth, and total commercial mortgage loans of $2.33 billion, or 50% of total loans, were down $10.5 million, from $2.34 billion as of December 31, 2025. The decrease in total commercial mortgage loans was attributable to decreases in non-owner occupied, multifamily, and owner occupied loans, partially offset by increases in construction loans. As of March 31, 2026, commercial real estate (“CRE”) loans made up approximately 67% of total commercial loans, and 45% of total loans, commercial and industrial loans approximated 28% of total commercial loans, and 18% of total loans, and business banking unit loans were approximately 5% of total commercial loans and 3% of total loans. Our CRE committed credit exposure at March 31, 2026 primarily related to approximately 45% multi-family, 20% office, 9% retail, 8% land, 8% hospitality, 5% industrial property, and 2% home builder properties. Approximately 72% of our office exposure at March 31, 2026, or 18% of our total CRE exposure related to Class B or medical office space. More than 70% of our office and 90% of our multifamily CRE loans have full or limited personal or corporate recourse.
Current wording
Total commercial loans of $3.21 billion represented 68% of total loans as of June 30, 2026, compared to $3.08 billion, or 66% of total loans as of December 31, 2025. Commercial business loans of $768.5 million, or 16% of total loans, were up $30.2 million, or 4%, from December 31, 2025, primarily due to organic growth, and total commercial mortgage loans of $2.44 billion, or 51% of total loans, were up $99.6 million, from $2.34 billion as of December 31, 2025. The increase in total commercial mortgage loans was attributable to increases in construction, non-owner occupied, and owner occupied loans, partially offset by a decrease in multifamily loans. As of June 30, 2026, commercial real estate (“CRE”) loans made up approximately 67% of total commercial loans, and 45% of total loans, commercial and industrial loans approximated 28% of total commercial loans, and 19% of total loans, and business banking unit loans were approximately 5% of total commercial loans and 3% of total loans. Our CRE committed credit exposure at June 30, 2026 related to approximately 44% multi-family, 22% office, 10% retail, 8% land, 8% hospitality, 5% industrial property, 2% other and 1% home builder properties. Approximately 70% of our office exposure at June 30, 2026, or 15% of our total CRE exposure, related to Class B or medical office space. Approximately 75% of our office and more than 90% of our multifamily CRE loans have full or limited personal or corporate recourse.
Previous wording
Total consumer loans of $1.55 billion, or 34% of total loans at March 31, 2026, decreased $27.9 million from December 31, 2025. Consumer loans at March 31, 2026 were comprised of residential real estate loans and lines of credit of $727.6 million, or 16% of total loans, consumer indirect loans of $787.9 million, or 17% of total loans, and other consumer loans of $33.9 million, or 1% of total loans. During the first quarter of 2026, we originated $68.1 million in indirect automobile loans with a mix of approximately 27% new automobile and 73% used automobile loans. This compares with the $89.1 million originated of indirect automobile loans with a mix of approximately 27% new automobile and 73% used automobile loans for the first quarter of 2025. Origination volumes and the mix of new and used vehicles financed fluctuate depending on general market conditions.
Current wording
Total consumer loans of $1.54 billion, or 33% of total loans at June 30, 2026, decreased $34.7 million from December 31, 2025. Consumer loans at June 30, 2026 were comprised of residential real estate loans and lines of credit of $738.7 million, or 16% of total loans, consumer indirect loans of $771.1 million, or 16% of total loans, and other consumer loans of $32.8 million, or 1% of total loans. During the second quarter of 2026, we originated $141.6 million in indirect automobile loans with a mix of approximately 29% new automobile and 71% used automobile loans. This compares with the $165.1 million originated of indirect automobile loans with a mix of approximately 27% new automobile and 73% used automobile loans for the second quarter of 2025. Origination volumes and the mix of new and used vehicles financed fluctuate depending on general market conditions.
Previous wording
Loans held for sale (not included in the loan portfolio composition table) were entirely comprised of residential real estate loans and totaled $1.0 million and $3.4 million as of March 31, 2026 and December 31, 2025, respectively.
Current wording
Loans held for sale (not included in the loan portfolio composition table) were entirely comprised of residential real estate loans and totaled $2.5 million and $3.4 million as of June 30, 2026 and December 31, 2025, respectively.
Previous wording
We sell certain qualifying newly originated or refinanced residential real estate loans on the secondary market. Residential real estate loans serviced for others, which are not included in the consolidated statements of financial condition, amounted to $297.8 million and $293.3 million as of March 31, 2026 and December 31, 2025, respectively.
Current wording
We sell certain qualifying newly originated or refinanced residential real estate loans on the secondary market. Residential real estate loans serviced for others, which are not included in the consolidated statements of financial condition, amounted to $302.1 million and $293.3 million as of June 30, 2026 and December 31, 2025, respectively.
Previous wording
Net charge-offs of $5.1 million for the first quarter of 2026 represented 0.44% of average loans on an annualized basis compared to net charge-offs of $2.4 million, or 0.21%, of average loans for the first quarter of 2025. The increase in net charge-offs in the first quarter of 2025 is primarily driven by the partial charge-off of a previously disclosed commercial business relationship place on nonaccrual status in 2023 for which a specific reserve was in place. The allowance for credit losses–loans was $44.7 million at March 31, 2026, compared with $49.0 million at March 31, 2025. The decrease in allowance for credit losses–loans was due to a combination of factors, including a decrease in consumer indirect loan balances, lower loss rates due to a higher prepayment assumptions and lower qualitative factors that are primarily quantitatively informed by historical data. The ratio of the allowance for credit losses–loans to total loans was 0.97% at March 31, 2026 and 1.08% at March 31, 2025. The ratio of allowance for credit losses–loans to non-performing loans was 116% at March 31, 2026, compared with 122% at March 31, 2025. Non-performing loans increased $2.7 million to $38.5 million at March 31, 2026, compared to $35.8 million at March 31, 2025. The increase in non-performing loans primarily reflects a well-collateralized commercial business loan that moved to nonaccrual status in the first quarter of 2026, offset in part by the partial charge-off of the previously disclosed commercial business relationship.
Current wording
Net charge-offs of $1.3 million for the second quarter of 2026 represented 0.11% of average loans on an annualized basis compared to net charge-offs of $4.1 million, or 0.36%, of average loans for the second quarter of 2025. Increased net charge-offs in the second quarter of 2025 were primarily driven by the partial charge-off of a previously disclosed commercial business relationship placed on nonaccrual status in 2023 for which a specific reserve was in place. The allowance for credit losses–loans was $47.5 million at June 30, 2026, compared with $47.3 million at June 30, 2025. The increase in allowance for credit losses–loans was due to a combination of factors, including the impact of an increase in loan outstandings and higher qualitative factors, partially offset by a decrease in loss rate for pooled loans. The ratio of the allowance for credit losses–loans to total loans was 1.00% at June 30, 2026 and 1.04% at June 30, 2025. The ratio of allowance for credit losses–loans to non-performing loans was 122% at June 30, 2026, compared with 146% at June 30, 2025. Non-performing loans increased $3.3 million to $39.0 million at June 30, 2026, compared to $35.8 million at June 30, 2025. The increase in non-performing loans primarily reflects a well-collateralized commercial business loan that moved to nonaccrual status in the first quarter of 2026, offset in part by the partial charge-off of the previously disclosed commercial business relationship.
Previous wording
Non-performing assets include non-performing loans and foreclosed assets. Non-performing assets at March 31, 2026 were $39.0 million, an increase of $3.2 million from the $35.8 million balance at December 31, 2025. The primary component of non-performing assets is non-performing loans, which were $38.5 million or 0.83% of total loans at March 31, 2026 and $35.8 million or 0.77% of total loans at December 31, 2025. The increase in non-performing loans reflects a well-collateralized commercial business loan that moved to nonaccrual status in the first quarter of 2026, offset in part by the partial charge-off of a previously disclosed commercial business relationship.
Current wording
Non-performing assets include non-performing loans and foreclosed assets. Non-performing assets at June 30, 2026 were $39.6 million, an increase of $3.7 million from the $35.8 million balance at December 31, 2025. The primary component of non-performing assets is non-performing loans, which were $39.0 million or 0.82% of total loans at June 30, 2026 and $35.8 million or 0.77% of total loans at December 31, 2025. The increase in non-performing loans reflects a well-collateralized commercial business loan that moved to nonaccrual status in the first quarter of 2026, offset in part by the partial charge-off of a previously disclosed commercial business relationship.
Previous wording
Approximately $1.0 million, or 3%, of the $38.5 million in non-performing loans as of March 31, 2026 were current with respect to payment of principal and interest but were classified as non-accruing because repayment in full of principal and/or interest was uncertain.
Current wording
Approximately $659 thousand, or 2%, of the $39.0 million in non-performing loans as of June 30, 2026 were current with respect to payment of principal and interest but were classified as non-accruing because repayment in full of principal and/or interest was uncertain.
Previous wording
Potential problem loans are loans that are currently performing, but information known about possible credit problems of the borrowers causes us to have concern as to the ability of such borrowers to comply with the present loan payment terms and may result in disclosure of such loans as non-performing at some time in the future. These loans remain in a performing status due to a variety of factors, including payment history, the value of collateral supporting the credits, and/or personal or government guarantees. We consider loans classified as substandard, which continue to accrue interest, to be potential problem loans. We identified $32.3 million and $27.6 million in loans that continued to accrue interest which were classified as substandard as of March 31, 2026 and December 31, 2025, respectively.
Current wording
Potential problem loans are loans that are currently performing, but information known about possible credit problems of the borrowers causes us to have concern as to the ability of such borrowers to comply with the present loan payment terms and may result in disclosure of such loans as non-performing at some time in the future. These loans remain in a performing status due to a variety of factors, including payment history, the value of collateral supporting the credits, and/or personal or government guarantees. We consider loans classified as substandard, which continue to accrue interest, to be potential problem loans. We identified $36.0 million and $27.6 million in loans that continued to accrue interest which were classified as substandard as of June 30, 2026 and December 31, 2025, respectively.
Previous wording
The following table summarizes the contractual maturities of our loan portfolio at March 31, 2026. Loans, net of deferred loan origination costs, include principal amortization and non-accruing loans. Demand loans having no stated schedule of repayment or maturity and overdrafts as reported as due in one year or less (in thousands).
Current wording
The following table summarizes the contractual maturities of our loan portfolio at June 30, 2026. Loans, net of deferred loan origination costs, include principal amortization and non-accruing loans. Demand loans having no stated schedule of repayment or maturity and overdrafts are reported as due in one year or less (in thousands).
Previous wording
We offer a variety of deposit products designed to attract and retain customers, with the primary focus on building and expanding long-term relationships. At March 31, 2026, total deposits were $5.34 billion, representing an increase of $131.5 million, or 3%, from December 31, 2025. The increase was primarily driven by seasonally higher public deposit balances and an increase in reciprocal deposits, partially offset by a decrease in non-public deposits. Time deposits were approximately 31% and 32% of total deposits at March 31, 2026 and December 31, 2025, respectively.
Current wording
We offer a variety of deposit products designed to attract and retain customers, with the primary focus on building and expanding long-term relationships. At June 30, 2026, total deposits were $5.30 billion, representing an increase of $93.1 million, or 2%, from December 31, 2025. The increase was primarily driven by seasonally higher public deposit balances and an increase in brokered and non-public deposits, partially offset by a decrease in reciprocal deposits. Time deposits were approximately 32% of total deposits at June 30, 2026 and December 31, 2025.
Previous wording
Non-public deposits, the largest component of our funding sources, totaled $3.11 billion and $3.16 billion at March 31, 2026 and December 31, 2025, respectively, and represented 58% and 61% of total deposits as of each date, respectively. We have managed this segment of funding through a strategy of competitive pricing that minimizes the number of customer relationships that have only a single service high-cost deposit account.
Current wording
Non-public deposits, the largest component of our funding sources, totaled $3.17 billion and $3.16 billion at June 30, 2026 and December 31, 2025, respectively, and represented 60% and 61% of total deposits as of each date, respectively. We have managed this segment of funding through a strategy of competitive pricing that minimizes the number of customer relationships that have only a single service high-cost deposit account.
Previous wording
As an additional source of funding, we offer a variety of public (municipal) deposit products to the towns, villages, counties and school districts within our market area. Public deposits generally range from 20% to 30% of our total deposits. There is a high degree of seasonality in this component of funding because the level of deposits varies with the seasonal cash flows for these public customers. We maintain the necessary levels of short-term liquidity to accommodate the seasonality associated with public deposits. Total public deposits were $1.25 billion and $1.09 billion at March 31, 2026 and December 31, 2025, respectively, and represented 24% and 21% of total deposits as of each date, respectively.
Current wording
As an additional source of funding, we offer a variety of public (municipal) deposit products to the towns, villages, counties and school districts within our market area. Public deposits generally range from 20% to 30% of our total deposits. There is a high degree of seasonality in this component of funding because the level of deposits varies with the seasonal cash flows for these public customers. We maintain the necessary levels of short-term liquidity to accommodate the seasonality associated with public deposits. Total public deposits were $1.14 billion and $1.09 billion at June 30, 2026 and December 31, 2025, respectively, and represented 22% and 21% of total deposits as of each date, respectively.
Showing the first 40 of 50 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Net interest income on a taxable equivalent basis for the six months ended June 30, 2026, was $105.4 million, an increase of $9.3 million versus the comparable period in 2025 of $96.1 million. Net interest margin for the six months ended June 30, 2026 was 3.53%, 11-basis points higher than 3.42% for the same period in 2025. This increase was a function of a 32-basis points increase in the net interest spread, partially offset by a 21-basis point lower contribution from net free funds. The increase in interest rate spread was comprised of a 40-basis points decrease in the average cost of interest-bearing liabilities, partially offset by an 8-basis points decrease in the average yield of interest-earning assets.
Current report — wording carried from elsewhere
(1)Investment securities are shown at amortized cost.
Current report — wording carried from elsewhere
(2)The interest on tax-exempt securities is calculated on a tax-equivalent basis assuming a federal income tax rate of 21%.
Current report — wording carried from elsewhere
(4)Loans include net unearned income, net deferred loan fees and costs and non-accruing loans. Net deferred loan fees (costs) included in interest income were as follows (in thousands):