FARMERS & MERCHANTS BANCORP INC
For the period ended Sep 30, 2026. Filed Oct 27, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Oct 27, 2026
FMAO$36.35-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-07-29.
0001193125-26-323955
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-10-27.
0001193125-26-433664
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 194 previous paragraphs and 199 current paragraphs.
109 unchanged; 76 reworded; 13 added; 6 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 21 previous and 22 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 (13)
Current report
Another strong benefit of the Company’s performance in relation to the strategic plan, the Company has been able to increase what it returns to shareholders. The Company returns capital to its shareholders through its normal quarterly dividend, declaring dividends of $3.4 million and $3.1 million in the third quarters of 2026 and 2025, respectively, and $9.7 million and $9.1 million for the comparative year-to-date periods. Furthermore, the Company can also repurchase its own shares outstanding. Through approval from the Board of Directors this year, the Company has been able to further expand on its stock repurchase program. During the quarter, the Company repurchased 41,500 shares totaling $1.4 million, which is more than the Company has repurchased in the last three years. These increases in dividends, as well as share repurchases, are a testament to Company performance and confidence of the Board and senior management. Furthermore, these repurchases are intended to partially offset dilution associated with equity-based management compensation while supporting the Company's broader objective of managing capital in a manner that enhances long-term shareholder value.
Current report
A portion of our strategic plan focuses on improvement in noninterest income while controlling noninterest expense. From a year-to-date perspective, the Company generated noninterest income of $15.3 million in 2026, up $2.8 million compared to $12.5 million for the same period in 2025. The largest contributors to this success are increases in cash surrender value of our Bank Owned Life Insurance “BOLI” portfolio and gains on sale of loans, followed up by contributions from service fees and other charges, as well as loan servicing income.
Current report
Operating expenses were $59.3 million in the first nine months of 2026, up $1.5 million, from $57.8 million. This is a 2.6% increase compared to 13.7% increase in net interest income after provision for credit losses. Furthermore, this increase is primarily attributable to employee expenses, as we recognize additional expenses with higher performance payouts. Furniture and equipment costs were comparatively higher in 2026 after adding a new office in the second half of 2025 and closure of the Custar office in the third quarter of 2026. We had increases in loan expense and mortgage servicing rights amortization, which were substantially offset by decreases in consulting and professional fees among others. Consulting fees are considerably lower in 2026 versus 2025 which included one-time fees associated with data processing, but we will also be incurring additional consulting fees in the remainder of the year with a couple of projects currently in process.
Current report
Overall, we have seen improvement in our past due loans and nonaccrual/nonperforming loan balances in the first half of the year which were sustained through the third quarter. In the last two quarters past-due loan levels remained below the elevated levels experienced in preceding quarters. Consumer, Consumer Real Estate and Commercial loan past due percentages are all well below prior year averages. Agricultural Real Estate past due loans includes one loan of $3.0 million as of September 2026. Year-to-date, the Company has net charge offs of $257 thousand compared to $380 thousand in the prior year period combined, as well as combined provision for credit losses of $1.0 million versus $1.5 million in the prior year.
Current report
Expanded Examination Cycle for Certain Small Insured Depository Institutions. In September 2026, the federal banking agencies jointly issued an interim final rule that expanded eligibility for an 18-month safety and soundness examination cycle for well-capitalized, well managed institutions with less than $6 billion in assets. This doubled the previous $3 billion asset threshold. Effective September 2026, this interim rule is intended to reduce regulatory burden and provide scheduling certainty for qualifying banks. The Bank is presently impacted by this change in the safety and soundness examination cycle.
Current report
Updated Examination Policies and Examination Manuals. In late August, the FDIC made updates to their Risk Management Manual of Examination Policies for safety and soundness examinations to incorporate changes to requirements in the FDIC Rules and Regulations. These updates included Section 1.1 Basic Examination Concepts, 4.5 Violations of Laws and Regulations, 16.1 Report of Examination Instructions, and 17.1 Example of Risk Management Report of Examination Pages. Concurrently, the FDIC made updates to the Consumer Compliance Examination Manual involving recent changes to Unsafe and Unsound Practices and Matters Requiring Attention. Updated sections included Documenting Earnings in II-4 under Pre-Examination Planning, II-8 Investigations and Visitations, II-11 Appeals, V-9 HMDA, and V-17 Small Dollar Lending.
Current report
Deposits have increased $231.8 million as of September 30, 2026 since December 31, 2025 with there being increases in all interest bearing deposits and non-interest bearing being down just slightly. Cash and cash equivalents also increased $108.1 million since December 31, 2025. The Bank had net repayments of $59.5 million in FHLB Borrowings and $15.0 million in federal funds, while funding a net increase in loans of $25.5 million.
Current report
In comparing to the same period in 2025, the September 30, 2026 (at amortized cost) loan balances of $2.74 billion increased $79.0 million, or 3.0%, from $2.66 billion. This increase included a $66.3 million, or 36.9%, increase in Agricultural loans, a $47.5 million, or 16.1%, increase in Commercial and Industrial loans, and a $26.7 million, or 5.1%, increase in Consumer Real Estate loans. These increases were partially offset by a $34.3 million, or 2.7%, decrease in Commercial Real Estate loans, a $13.3 million, or 21.8%, decrease in Consumer loans, an $11.8 million, or 5.3% decrease in Agricultural Real Estate loans, and a $2.0 million, or 8.3% decrease in Other loans. The Company's team of lenders remain focused on growing a strong, diverse loan portfolio by providing customers valuable localized services as provided for by our deposit growth discussed above, thereby increasing our market share.
Current report
Presented below are fixed rate loans and variable rate loans by portfolio segment as of September 30, 2026 and December 31, 2025:
Current report
Variable rate loans that have reached ceiling or floor limits are reported as fixed rate loans until such time as their rates adjust away from those limits.
Current report
The provision for unfunded loan commitments increased $751 thousand in the third quarter of 2026 compared to the third quarter of 2025. Unfunded loan commitments increased $55.0 million in third quarter of 2026 compared to decreasing $3.9 million in third quarter of 2025. The majority of the increase in unfunded loan commitments in the third quarter of 2026 included $28 million in Commercial & Industrial and $27 million in Construction & Development compared to the second quarter of 2026. The former is expected to fund in the fourth quarter of 2026 and the latter carries the highest reserve percentage among unfunded loan categories due to higher funding assumptions and historical loss rates, hence the larger increase in the allowance for unfunded loan commitments in the third quarter of 2026.
Current report
Noninterest income was up $510 thousand, or 11.7%, for the three months ended September 30, 2026 over the same time frame in 2025. Customer service fees, other service charges and fees, and loan servicing were all relatively flat compared to the three months ended September 30, 2025. Interchange income increased $66 thousand for the current quarter.
Current report
The provision for unfunded loan commitments increased $1.1 million in the first nine months of 2026 compared to the same time period of 2025. Unfunded loan commitments increased $39 million in 2026 compared to decreasing $26.6 million in 2025.
Removed paragraphs (6)
Previous report
A portion of our strategic plan focuses on improvement in noninterest income while controlling noninterest expense. Noninterest income has favorable comparisons in the quarter’s performance and year-to-date. In terms of dollars, it is higher than first quarter 2026, second quarter 2025 and year-to-date as of June 30 th comparisons. The largest contributors to this success are gain on sale of loans and our restructure of our Bank Owned Life Insurance “BOLI” portfolio. Gain on sale of loans originates out of three real estate portfolios, 1-4 family, agricultural and small business. The improvement in gain on sale for 2026 is driven mostly by the agricultural real estate portfolio where we sell 90% of the loan and maintain 10% and receive servicing income for the life of the loan.
Previous report
Operating expenses are up slightly due mainly to employee expenses, as we accrue with higher performance payouts. In comparing the first half of 2026 to the first half of 2025, furniture and equipment include our newest office in 2026 that was not added until the second half of 2025. Consulting fees are also considerably lower in 2026 versus 2025 which included one-time fees associated with data processing. A couple of upcoming projects will increase consulting fees in the second half.
Previous report
Overall, we have seen improvement in our past due loans and nonaccrual/nonperforming loan balances. The Bank is back to a more normal range of 0.34% of loans past due, following a couple quarters with higher levels of past due loans. Consumer, Home Loans and Commercial loan past due percentages are all well below last year’s averages. Agricultural Real Estate past due loans includes one loan of $3.8 million as of June 2026. Nonaccrual loan balances are down 33.31% from last quarter; however, remain 97.14% higher when compared to second quarter 2025. Agricultural Real Estate nonaccrual loans remain higher than other loan segments primarily due to one loan that is in the work out process.
Previous report
Deposits have increased $138.7 million as of June 30, 2026 since December 31, 2025 and $59.7 million since March 2026. Both comparisons had increases in savings accounts and time deposits with decreases in noninterest bearing accounts. Cash and cash equivalents also increased $58.7 million since December 31, 2025; however, decreased $17.1 million since March 31, 2026. Although cash balances were used to reduce FHLB borrowings and federal funds purchased as well as fund security purchases, cash balances increased due to loan payoffs and paydowns as well as deposit growth.
Previous report
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 report
The additional cost of the offices is also evident in the increased expenses in net occupancy with additional lease expense of $29 thousand and building depreciation of $60 thousand. Furniture and equipment increased in total $7 thousand which was comprised of increases in maintenance contracts and repairs of $44 and $37 thousand, respectively, and decreases in depreciation and small equipment purchases of $54 and $17 thousand, respectively.
Reworded paragraphs (76)
Previous wording
The Company continues to realize the benefits of being disciplined in the execution of our strategic plan. The largest benefit evident is the improvement in overall profitability. Net income is up 45.79% or over $6.7 million year to date compared to year-to-date 2025. On a quarterly basis, net income is up 23.17% compared to 1 st quarter 2026 and 53.01% compared to same quarter last year. In comparing year-to-date June 30, 2026, to June 30, 2025, both aspects of net interest income have improved due to our pricing discipline – interest income is up $4.45 million and interest expense decreased by $2.29 million. Interest income from loans benefited with a higher average balance and a higher yield in comparing both the second quarters and the six months of 2026 to 2025.
Current wording
After completion of the third quarter, the Company is well-positioned to finish the year strong, resulting from disciplined execution of our strategic plan. The largest benefit evident is the improvement in overall profitability, driven by increases in interest and non-interest income and a decrease in interest expense. Additionally, non-interest expense was up year-over year, but to a comparatively smaller extent than increases in income. These factors have all contributed to an increase in net income of $9.4 million, or 40.0% year-to-date compared to the same period in 2025. On a quarterly basis, net income is up $2.7 million or 30.3% compared to the same quarter last year. In comparing year-to-date September 30, 2026, to September 30, 2025, both aspects of net interest income have improved due to our pricing discipline – interest income is up nearly $7.0 million and interest expense decreased by $2.8 million. Interest income from loans benefited by higher average balances and higher yields in comparing both the third quarters and the nine months of 2026 to 2025.
Previous wording
Total deposits also grew in comparisons of the two periods, mainly in money market and certificate of deposit balances. Interest expense decreased in comparing 2026 to 2025 in both second quarter and year-to-date performances. Deposit growth enabled FHLB borrowings to be paid off along with the continuing paydown of the amortized borrowings. This all culminated with net interest margin for the 2 nd quarter 2026 at 3.48% compared to 3.22% for the same period a year ago and year-to-date at 3.45% compared to 3.13% a year ago. We expect the net interest margin to continue to improve with the percentage of favorable repricing in the loan portfolio in the next 18 months.
Current wording
Total deposits also grew in comparisons of the two periods, mainly in money market and certificate of deposit balances. Interest expense decreased in comparing 2026 to 2025 in both third quarter and year-to-date performances. Deposit growth enabled FHLB borrowings to be paid down. This all culminated with net interest margin for the third quarter 2026 at 3.57% compared to 3.40% for the same period a year ago and year-to-date at 3.50% compared to 3.22% a year ago. We expect the net interest margin to continue to improve with the percentage of favorable repricing in the loan portfolio in the next 18 months, although the extent of that improvement will depend on market interest rates, funding costs, and other factors.
Previous wording
In looking at the current economy in our market areas, a great deal of attention remains on the agricultural section. For our grain farmers, the planting season was relatively timely and overall crop conditions are good in our market area. Projected margins are tight for 2026 but government subsidies have provided some support. Land values remain stable showing continued demand for land with financially able buyers. The livestock market continues to be profitable. The agricultural and grain elevator lines of credit saw increased usage in the first quarter of 2026, and we are starting to see some reductions in line usage area for the second quarter. Our agricultural equipment dealers continue to endure lower sales, but the overall performance of agricultural businesses has been acceptable.
Current wording
In looking at the current economy in our market areas, a great deal of attention remains on the agricultural section. For our grain farmers, the planting season was relatively timely and overall crop conditions were good in our market area as we head into harvest season at the end of the third quarter. Projected margins are tight for 2026 but government subsidies have provided some support. Land values remain stable showing continued demand for land with financially able buyers. The livestock market continues to be profitable. The agricultural and grain elevator lines of credit saw increased usage in the first quarter of 2026, and we have seen some reductions in line usage area for the second and third quarters. Our agricultural equipment dealers continue to endure lower sales, but the overall performance of agricultural businesses has been acceptable. Agricultural borrowers in the Bank’s Ohio, Michigan, and Indiana markets remain exposed to changes in export demand. Tariffs and uncertainty surrounding trade with China, particularly for soybeans, could adversely affect crop marketing opportunities, farm income, and borrowers’ repayment capacity. Management continues to monitor these conditions and their potential effects on agricultural credit quality and the allowance for credit losses.
Previous 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.
Current wording
The Commercial banking division realized modest growth in the third quarter after being flat the first half of 2026. Loan volume in the first half was consistent with previous quarters; however, the expected payoffs and normal amortization outweighed the overall production. Lending rates moved higher in the third quarter and overall terms remained consistent. However, there were competitive pressures as we finished the third 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 the third quarter. Collateral values and auction values are still consistent with previous quarters.
Previous wording
The Bank made the decision to discontinue the Indirect Lending Department as of March 2026 and directed that business to our direct consumer lending department. This contributed to a decrease in the consumer loan portfolio of 13.4% or $7.89 million as compared to year-end 2025 and 14.1% or $8.40 million as compared to June 30, 2025.
Current wording
The Bank made the decision to discontinue the Indirect Lending Department as of March 2026 and directed that business to our direct consumer lending department. This contributed to a decrease in the consumer loan portfolio of 19.7% or $11.6 million as compared to year-end 2025 and 21.9% or $13.2 million as compared to September 30, 2025.
Previous wording
We continue to see home equities being the driver to higher balances in the consumer real estate portfolio segment. Home equities account for increased balances of $8.53 million since year-end 2025 and $5.39 million over first quarter of 2026, while the overall consumer real estate portfolio segment shows a smaller gain in comparison to the same time periods of $7.0 million and lower by $1.55 million, respectively.
Current wording
Fixed home loan originations to be sold to the secondary market experienced the highest dollar volume by quarter of the last two years at $16.8 million and $13.3 for the second and third quarters, respectively. Similarly, the same is true for the actual dollar volume of sold loans during the quarter at $15.4 million and $14.9 million. We continue to see home equities being the driver to higher balances in the consumer real estate portfolio segment. Home equities account for increased balances of $17.1 million since year-end 2025 and $8.0 million over second quarter of 2026, while the overall consumer real estate portfolio segment shows a smaller gain in comparison to the same time periods of $22.5 million and higher by $15.5 million, respectively.
Previous wording
Overall, net income continues to expand in 2026 at a greater percentage than our asset growth. When comparing June 30, 2026, to June 30, 2025, assets grew 4.67% while net income grew 45.79%. Our continued attention on maximizing revenues while limiting expenses is serving us well. The Company remains well capitalized with sound liquidity levels and strong asset quality.
Current wording
Overall the Company has had strong performance thus far in 2026, net income continues to expand in 2026 at a greater percentage than our asset growth, and income generation exceeding growth or reduction in certain expenses. When comparing September 30, 2026, to September 30, 2025, assets grew 6.1% while net income grew 40.0%. Our continued attention on maximizing revenues while limiting expenses is serving us well. The Company remains well capitalized with sound liquidity levels and strong asset quality.
Previous wording
Our executive offices are located at 307 North Defiance Street, Archbold, Ohio 43502, and our telephone number is (419) 446-2501. The Bank operates thirty-eight full-service banking offices throughout Northwest Ohio, Northeast Indiana and Southeast Michigan along with a drive-up facility in Archbold. The Bank also operates three Loan Production Offices (LPOs), two in Ohio and one in Indiana.
Current wording
Our executive offices are located at 307 North Defiance Street, Archbold, Ohio 43502, and our telephone number is (419) 446-2501. The Bank operates thirty-seven full-service banking offices throughout Northwest Ohio, Northeast Indiana and Southeast Michigan along with a drive-up facility in Archbold. The Bank also operates three Loan Production Offices (LPOs), two in Ohio and one in Indiana.
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 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.
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 of 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
All loan requests are reviewed as to credit worthiness and are subject to the Bank's underwriting guidelines as to secured versus unsecured credit. Secured loans are in turn subject to loan-to-value (LTV) requirements based on collateral types as set forth in the Bank's Loan Policy. In addition, credit scores of those seeking consumer credit are reviewed and if they do not meet the Bank's Loan Policy guidelines, an additional officer approval is required.
Current wording
All loan requests are reviewed as to credit worthiness and are subject to the Bank's underwriting guidelines as to secured versus unsecured credit. Secured loans are in turn subject to loan-to-value (LTV) requirements based on collateral types as set forth in the Bank's Loan Policy. In addition, credit scores of those seeking consumer credit are reviewed and if they do not meet the Bank's Loan Policy guidelines, additional officer approval is required.
Previous 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.
Current wording
At September 30, 2026, we had 486 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 / Regulation B Amendments. In April 2026, the CFPB issued final amendments to Regulation B addressing disparate impact, discouragement of applicants or prospective applicants, and special purpose credit programs. These amendments may affect fair lending compliance, credit policy administration, training, monitoring, and documentation practices. The Bank continues to evaluate these changes in connection with its fair lending program and broader consumer compliance management system.
Current wording
Equal Credit Opportunity Act / Regulation B Amendments. In April 2026, the CFPB issued final amendments to Regulation B addressing disparate impact, discouragement of applicants or prospective applicants, and special purpose credit programs. These amendments may affect fair lending compliance, credit policy administration, training, monitoring, and documentation practices. The Bank continues to evaluate these changes in connection with its fair lending program and broader consumer compliance management system. Additionally, in August 2026, rescission of an interagency statement on special purpose credit programs emphasized creditors may not use race-based or other prohibited characteristics criteria in lending programs unless tied to specific, proven instances of unlawful discrimination.
Previous wording
Community Reinvestment Act (CRA) Updates. The 2023 CRA rule, jointly issued by the Federal Reserve, FDIC, and OCC, is subject to ongoing litigation and its implementation is currently paused. The agencies have proposed rescinding the 2023 framework and reverting to pre-October 2023 standards. The Bank continues to operate under the prior framework and monitors regulatory updates.
Current wording
Community Reinvestment Act (CRA) Updates. The 2023 CRA rule, jointly issued by the Federal Reserve, FDIC, and OCC, is subject to ongoing litigation and its implementation is currently paused. The agencies have proposed rescinding the 2023 framework and reverting to pre-October 2023 standards. In August 2026, the FDIC, OCC, and Treasury jointly issued new proposed CRA rules offering targeted changes and a 60-day comment period ending on October 13, 2026. The Bank continues to operate under the prior 1995 CRA framework and monitors regulatory updates.
Previous wording
GENIUS Act – Payment Stablecoins. Enacted in July 2025, the GENIUS Act establishes standards for payment stablecoins issued by banks, including reserve requirements, reporting, audits, and supervisory oversight. The Bank is evaluating potential strategic and compliance implications under this framework as part of its digital asset initiatives. Regulatory agencies have until 2027 to finalize implementing rules.
Current wording
GENIUS Act – Payment Stablecoins. Enacted in July 2025, the GENIUS Act establishes standards for payment stablecoins issued by banks, including reserve requirements, reporting, audits, and supervisory oversight. The Bank is evaluating potential strategic and compliance implications under this framework as part of its digital asset initiatives. The Bank remains attentive to proposed rules since regulatory agencies have until 2027 to finalize implementing rules.
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 $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.
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 $14.3 million and $11.7 million at September 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 $211 thousand at June 30, 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 $118 thousand at September 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 $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.
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 and interchange fees. Noninterest bearing deposits increased $17.5 million from September 30, 2025 to September 30, 2026. Interest bearing deposits also increased by $193.0 million over the same time period. This was comprised of an increase in savings accounts of $90.3 million, an increase in time deposits of $70.2 million and an increase in NOW accounts of $32.5 million.
Previous 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.
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 $15.0 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 $154.8 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 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.
Current wording
At September 30, 2026, the investment portfolio of the Bank had $280.7 million of pledged securities with $170.7 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 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.
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 48.23% of the Company's total gross loan portfolio as of September 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 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.
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 nine months of 2026 from year end 2025 due to net purchases of $42.4 million. During the current quarter, the security portfolio increased due to net purchases of $20.5 million. In the first quarter of 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. The amount of pledged investment securities increased by $14.2 million as compared to year end and $13.6 million as compared to September 30, 2025. As of September 30, 2026, pledged investment securities totaled $280.7 million. The Company plans to make additional purchases of securities for the remainder of the year for the purpose 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 $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.
Current wording
As mentioned previously, an additional $154.8 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 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.
Current wording
Overall total assets increased 4.8% or $164.7 million since year end 2025 and $96.9 million or 2.8% since June 30, 2026. The largest areas of growth since December 2025 occurred in the cash and due from banks and the security portfolio of $108.1 million and $33.9 million, respectively, as well as a $23.4 million increase in the loan portfolio. Although the loan portfolio did increase, the Bank continues to pursue loan growth with total new money funded in the nine months ended September 30, 2026 of $676.8 million and $231.2 million in the third quarter.
Previous 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.
Current wording
Total liabilities increased $148.6 million since year end 2025 and $94.7 million since the end on the second quarter. The largest increase was in total deposits of $231.8 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 nine months of 2026, net FHLB advances of $59.4 million and federal funds purchased of $15 million have been repaid.
Previous 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.
Current wording
Shareholders’ equity increased by $16.1 million as of September 30, 2026 compared to year end 2025 and $2.2 million since June 30, 2026. Accumulated other comprehensive loss increased in unrealized loss position by $6.7 million from December 2025 to an unrealized loss of approximately $18.6 million on September 30, 2026. Dividends declared increased from the prior quarter $0.23 per share to $0.25 per share and were 9.9% over third quarter 2025’s $0.2275 per share. Compared to September 30, 2025, shareholders’ equity increased 7.0% or $25.1 million, primarily attributable to net income generated over this period, less dividends provided to shareholders. Net income was higher for the nine months ended September 30, 2026 compared to September 30, 2025 by 40.0% or $9.4 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 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.
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 $9 million dividend during the third quarter of 2026. A portion of the excess funds upstreamed are for sub-debt paydowns and the repurchase of shares, of which 41,500 shares were repurchased in the third quarter for approximately $1.4 million. The Company intends to pay down $7.0 million, or 20%, of its outstanding subordinated notes with its next quarterly interest payment October 30, 2026.
Previous 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.
Current wording
When comparing third quarter 2026 to third quarter 2025, average loan balances grew $77.2 million, which represented a 2.9% increase. Interest income on loans increased just under $1.1 million or 2.6% as compared to the quarter ended September 30, 2025. Loan interest for third quarter 2025 included a one-time fee collected of $195 thousand in addition to $191 thousand from the recovery of one acquired relationship that had been fully charged off prior to acquisition. The Company's loan portfolio is 52.4% variable rate with 33.9% of total loans subject to repricing within the next three months.
Previous wording
The available-for-sale securities portfolio decreased in average balances by $5.1 million or 1.1% when comparing to the same quarter in 2025 with the income associated with the security portfolio increasing $387 thousand over second quarter 2025. During the current quarter, maturities and paydowns of securities were $25.5 million, purchases were $37.6 million and unrealized loss increased $430 thousand. 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 $70.5 million as compared to the same quarter in 2025 with increased income of $459 thousand for the current quarter. The increased balances are primarily the result of the focus on liquidity and deposit generation offset by funding loans and repayment of other borrowed money.
Current wording
The available-for-sale securities portfolio increased in average balances by $24.5 million or 5.3% when comparing to the same quarter in 2025 with the income associated with the security portfolio increasing $711 thousand over third quarter 2025. During the current quarter, maturities and paydowns of securities were $19.7 million, purchases were $40.2 million and unrealized loss increased $5.9 million. The additional income from the security portfolio can be attributed to the increased book yield of 2.97% as of September 30, 2026 from 2.32% as of September 30, 2025. Federal funds sold and interest-bearing deposits increased in average balances by $89.3 million as compared to the same quarter in 2025 with increased income of $749 thousand for the current quarter. The increased balances are primarily the result of the focus on liquidity and deposit generation offset by funding loans and repayment of other borrowed money.
Previous 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.
Current wording
The overall total average balance of the Bank’s earning assets increased by $191 million and interest income for the quarter comparisons were higher for third quarter 2026 by 5.6% or $2.5 million as compared to third quarter 2025. Rate changes between periods have contributed to approximately 9.7% of the growth.
Previous 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.
Current wording
Annualized yield, for the quarter ended September 30, 2026, was 5.61% as compared to 5.62% for the quarter ended September 30, 2025. The following charts demonstrate increased loan balances accounted for 114.0% of the increased loan interest income which was offset by rate decreases of 14.0%. 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 $717 and $132 thousand for third quarter 2026 and 2025, respectively, which resulted in federal tax savings of $151 and $28 thousand, respectively, less the TEFRA adjustments of $15 and $4 thousand, respectively.
Previous 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.
Current wording
Contributing to the increased net interest income for the quarter was a decrease in interest expense of $531 thousand or 3.0% compared to third quarter 2025. Since September 30, 2025, average interest-bearing deposit balances have increased $186 million or 8.3% while the Company recognized $302 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. In September 2026, the Federal Reserve increased the federal funds rate by 25 basis points. Deposit rates continue to be reviewed and adjusted with rate changes. The following charts demonstrate increased average interest-bearing deposit balances accounted for $1.3 million of additional interest-bearing deposit expense while rate decreases accounted for decreased interest-bearing deposit expense of $1.6 million. Noninterest-bearing average deposits balances increased $13.8 million compared to third 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 $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.
Current wording
Interest expense on borrowed funds decreased $272 thousand in the third quarter 2026 over the same time frame in 2025 due to the repayment of FHLB advances. During the current quarter, FHLB borrowings of $547 thousand were repaid. Interest expense on federal funds purchased and securities sold under agreement to repurchase decreased $153 thousand compared to third quarter 2025 due to the decrease of $12.4 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 third quarter 2025. The average cost of funds decreased to 2.59% in third quarter of 2026 compared to 2.83% in third quarter 2025. Interest expense due to subordinated notes increased $196 thousand during the third quarter 2026 as compared to third quarter 2025 as the rate has changed to the Three-Month SOFR plus a spread of 263 basis points. Refer to Note 11 for additional information on subordinated notes.
Previous 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.
Current wording
As the following chart indicates, the decreased cost of funds of 24 basis points offset by a slight decrease in yields on interest earning assets of 1 basis point equated to a 23 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
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.
Current wording
Net interest income increased slightly more than $3.0 million for the third quarter 2026 over the same time frame in 2025 due to the increase in interest income of $2.5 million combined with the interest expense decrease of $531 thousand 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 81.2% in third quarter 2026 compared to 83.7% in third quarter 2025. Loans to total assets decreased to 76.8% in third quarter 2026 compared to 79.1% for the same period 2025. The percentage of earning assets to total assets remained flat at 94.6% for the three months ended September 30, 2026 and 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 $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.
Current wording
Total provision for credit losses increased $90 thousand for the three months ended September 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 $15 thousand higher during the three months ended September 30, 2026 than the same period in 2025. Loan charge-offs for the current quarter were in the consumer portfolio and consumer real estate portfolio segments while 99.2% of charge-offs for the same period in 2025 were in the consumer portfolio. Of the total consumer charge-offs, $13 and $43 thousand were for automobiles and trucks for the three months ended September 30, 2026 and 2025, respectively. 2025 consumer charge-offs also included $9 thousand for recreational vehicles. Recoveries were $39 thousand higher during the three months ended September 30, 2026 as compared to same period in 2025 with 94.0% of total current quarter recoveries in the consumer portfolio compared to 78.7% for the same period in 2025. Of the total consumer recoveries, $59 thousand were for automobiles and trucks and $12 thousand were for recreational vehicles for the three months ended September 30, 2026 compared to $18 thousand for automobiles and trucks for the same period in 2025. Combined net charge-offs were $24 thousand lower in the three months ended September 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
The provision for credit losses on loans decreased by $488 thousand or 73.8% in the second quarter of 2026 compared to the second quarter of 2025 due to gross loan portfolio growth of only $23.6 million or 0.9% in the second quarter of 2026 compared to gross loan portfolio growth of $44.5 million or 1.7% in the second quarter of 2025. Moreover, gross commercial real estate loan balances declined by $6.9 million or 0.5% in the second quarter of 2026 compared to gross commercial real estate loan balance growth of $20.2 million or 1.5% in the second quarter of 2025, and commercial real estate loans tend to have higher reserves. Likewise, the Bank has experienced reductions in consumer loans which tend to have higher reserves, and an increase in agricultural loans which tend to have a lower reserve based on loss history. Lastly, the specific reserve portion of the ACL for collateral dependent loans decreased in the second quarter of 2026 by $286 thousand due to some principal paydowns on individually evaluated loans, compared to a reduction in specific reserves of $68 thousand in the second quarter of 2025.
Current wording
The provision for credit losses on loans decreased by $661 thousand or 118.7% in the third quarter of 2026 compared to the third quarter of 2025 with gross loan portfolio growth of $33.1 million or 1.2% in the third quarter of 2026 compared to gross loan portfolio growth of $33.3 million or 1.3% in the third quarter of 2025. Gross commercial real estate loan balances grew by $12.4 million or 0.9% in the third quarter of 2026 compared to gross commercial real estate loan balance growth of $9.2 million or 0.7% in the third quarter of 2025. Commercial real estate loans tend to have higher reserves; however, included in the commercial real estate loan category are construction loans, which decreased by $16.6 million in the third quarter of 2026, and typically carry higher reserves based on loss history. Likewise, the Bank has experienced reductions in consumer loans which tend to have higher reserves, and an increase in agricultural loans which tend to have a lower reserve based on loss history. Moreover, the reduction in the national unemployment rate resulted in lower expected future loss rates, as supported by the low level of net charge-off activity experienced in the third quarter of 2026. Similarly, the Bank’s total Special Mention and Substandard loans decreased by $30.3 million in the third quarter of 2026 compared to the second quarter of 2026, contributing to a lower allowance for credit loss. Lastly, the specific reserve portion of the ACL for collateral dependent loans decreased in the third quarter of 2026 by $93 thousand primarily due to some principal paydowns on individually evaluated loans, compared to an increase in specific reserves of $298 thousand in the third quarter of 2025.
Previous 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.
Current wording
Loans past due 30 or more days increased $3.8 million at September 30, 2026 as compared to September 30, 2025. The largest changes were attributed to the agricultural real estate portfolio segment which increased $2.7 million for the same time period, of which $3.0 million is attributed to one loan. The consumer real estate portfolio segment also increased $1.4 million while the commercial real estate portfolio segment decreased $430 thousand as compared to September 30, 2025.
Previous 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 $926 thousand, $1.9 million or $380 thousand, respectively. Refer to Note 7 for additional information related to derivative financial instruments.
Current wording
The balance of loans, amortized cost at September 30, 2026, September 30, 2025 and September 30, 2024 within this chart does not include a fair value basis adjustment for derivatives of a $159 thousand reduction, $1.9 million and $3.0 million, respectively, or a daily average outstanding balance of $385 thousand, $1.8 million or $1.6 million, respectively. Refer to Note 7 for additional information related to derivative financial instruments.
Previous 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.
Current wording
Loans classified as nonaccrual were higher as of September 30, 2026 at $6.2 million as compared to $5.2 million as of September 30, 2025. The agricultural real estate portfolio segment increased $3.3 million as compared to September 30, 2025 with $3 million attributed to one loan with a specific allocation of $35 thousand. The consumer real estate portfolio, commercial and industrial portfolio and commercial real estate portfolio segments decreased $1.7 million, $333 thousand and $140 thousand, respectively, as compared to September 30, 2025. Nonaccrual loans in the agricultural portfolio segment increased $51 thousand while nonaccrual loans in the consumer portfolio segment decreased $36 thousand as compared to September 30, 2025.
Previous 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.
Current wording
The volume of total originations of loans held for sale increased while the associated gain on the sale of these loans was $45 thousand lower for the three months ended September 30, 2026 over the same period in 2025. Total originations of loans held for sale for the three months ended September 30, 2026 were $21.5 million with proceeds from sale at $22.4 million for 2026 compared to 2025’s activity of $14.8 million in originations and $18.6 million in sales. The mortgages sold were both 1-4 family real estate and agricultural real estate loans originated for sale.
Showing the first 40 of 76 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
FDIC assessments decreased $143 thousand in 2026 from 2025 due to a decrease in the quarterly assessment multiplier. Servicing rights amortization included $541 thousand for impairment of agricultural loan servicing rights in the nine months ended September 30, 2026 compared to $359 thousand for the same time period in 2025. Loan expense included one-time payments of $169 thousand related to an acquired loan during the second quarter of 2026 and $173 thousand related to an incorrect interest rate during the third quarter of 2026. Consulting fees decreased $590 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.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Fixed home loan originations to be sold to the secondary market experienced the highest dollar volume by quarter of the last 2 years at $16.8 million. Similarly, the same is true for the actual dollar volume of sold loans during the quarter at $15.4 million.
Previous report — wording carried elsewhere
Noninterest income was up $1.5 million, or 38.0%, for the three months ended June 30, 2026 over the same time frame in 2025. Customer service fees increased by $214 thousand as compared to the three months ended June 30, 2025 which was due primarily to increases of mortgage release fees of $64 thousand, miscellaneous customer service fees of $55 thousand and merchant service referral fees of $50 thousand. Other service fees increased by $95 thousand compared to the same period in 2025, which includes overdraft and returned check fees of $60 thousand and combined service charges on DDA, savings accounts, ATM and miscellaneous of $31 thousand. Interchange income increased $88 thousand for the current quarter. Loan servicing income increased $217 thousand which included increases in servicing rights income for both 1-4 family real estate loans and agricultural real estate loans of $124 and $78 thousand, respectively, as compared to the same period in 2025.
Previous report — wording carried elsewhere
The gain on sale of other assets owned for the three months ended June 30, 2026 included a $139 thousand gain on the sale of the Ossian branch which the Bank is leasing back and a loss of $111 thousand on the sale of the two other real estate owned properties.