UMB FINANCIAL CORP

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations highlights the material changes in the results of operations and changes in financial condition of the Company for the three and six months ended June 30, 2026. It should be read in conjunction with the accompanying Consolidated Financial Statements, Notes to Consolidated Financial Statements and other financial information appearing elsewhere in this Form 10-Q and the Form 10-K. Results of operations for the periods included in this review are not necessarily indicative of results to be attained during any future period.

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations highlights the material changes in the results of operations and changes in financial condition of the Company for the three and nine months ended September 30, 2026. It should be read in conjunction with the accompanying Consolidated Financial Statements, Notes to Consolidated Financial Statements and other financial information appearing elsewhere in this Form 10-Q and the Form 10-K. Results of operations for the periods included in this review are not necessarily indicative of results to be attained during any future period.

Previous wording

On January 31, 2025, UMBF completed its previously announced acquisition of Heartland Financial, USA, Inc. (HTLF). The acquisition added assets with a fair value of approximately $16.1 billion, $9.7 billion of loans, net of the allowance for credit losses, and $14.3 billion of deposits. The combined company retains its #1 deposit market share in Missouri and now ranks in the top 10 in Colorado, New Mexico, Kansas, and Arizona.

Current wording

On January 31, 2025, UMBF completed its acquisition of Heartland Financial, USA, Inc. (HTLF). The acquisition added assets with a fair value of approximately $16.1 billion, $9.7 billion of loans, net of the allowance for credit losses, and $14.3 billion of deposits. The combined company retains its #1 deposit market share in Missouri and now ranks in the top 10 in Colorado, New Mexico, Kansas, and Arizona.

Previous wording

The first financial objective is to continuously improve operating efficiencies. The Company has focused on identifying efficiencies that simplify our organizational and reporting structures, streamline back-office functions, and take advantage of synergies and newer technologies among various platforms and distribution networks. The Company has identified and expects to continue identifying ongoing efficiencies through the normal course of business that, when combined with increased revenue, will contribute to improved operating leverage. During the second quarter of 2026, total revenue increased $88.8 million, or 12.9%, as compared to the second quarter of 2025, while noninterest expense increased $6.5 million, or 1.6%, for the same period. Included in noninterest expense for the second quarter of 2025 is $13.5 million in acquisition-related expense compared to $1.7 million in the second quarter of 2026. Revenue is also impacted by accretion and amortization of the fair value adjustments discussed in Note 13, “Acquisition” above. As part of the initiative to improve operating efficiencies, the Company continues to invest in technological advances that it believes will help management drive operating leverage in the future through improved data analysis and automation. The Company also continues to evaluate core systems and will invest in enhancements that it believes will yield operating efficiencies.

Current wording

The first financial objective is to continuously improve operating efficiencies. The Company has focused on identifying efficiencies that simplify its organizational and reporting structures, streamline back-office functions, and take advantage of synergies and newer technologies among various platforms and distribution networks. The Company has identified and expects to continue identifying ongoing efficiencies through the normal course of business that, when combined with increased revenue, will contribute to improved operating leverage. During the third quarter of 2026, total revenue increased $94.0 million, or 13.9%, as compared to the third quarter of 2025, while noninterest expense decreased $19.8 million, or 4.7%, for the same period. Included in noninterest expense for the third quarter of 2025 is $35.6 million in acquisition-related expense compared to $0.1 million in the third quarter of 2026. Revenue is also impacted by accretion and amortization of the fair value adjustments discussed in Note 13, “Acquisition” above. As part of the initiative to improve operating efficiencies, the Company continues to invest in technological advances that it believes will help management drive operating leverage in the future through improved data analysis and automation. The Company also continues to evaluate core systems and will invest in enhancements that it believes will yield operating efficiencies.

Previous wording

The second financial objective is to increase net interest income through profitable loan and deposit growth and the optimization of the balance sheet. During the second quarter of 2026, the Company had an increase in net interest income of $65.5 million, or 14.0%, from the same period in 2025. The change in net interest income was primarily driven by favorable repricing of deposits in conjunction with lower short-term interest rates, and increases of $4.2 billion, or 11.6%, in average loans and $2.2 billion, or 12.6%, in average securities. These increases were partially offset by a decrease of $2.9 billion, or 44.3%, in average interest-bearing due from banks and $6.3 million in lower purchase accounting accretion income. The funding for these assets was driven by an increase in average interest-bearing deposits of 3.9%, and an increase in noninterest-bearing demand deposit balances of 2.1% compared to the second quarter of 2025. Net interest margin, on a tax-equivalent basis, increased 22 basis points compared to the same period in 2025, primarily driven by favorable repricing of deposits in conjunction with lower short-term interest rates. Net interest spread increased 34 basis points during the same period. The Company expects to see continued volatility in the economic markets resulting from governmental responses to inflation and recessionary signs in the economy, as well as uncertainty about the impacts of the conflict in Iran and tariffs. These changing conditions could have impacts on the balance sheet and income statement of the Company for the remainder of the year.

Current wording

The second financial objective is to increase net interest income through profitable loan and deposit growth and the optimization of the balance sheet. During the third quarter of 2026, the Company had an increase in net interest income of $65.0 million, or 13.7%, from the same period in 2025. The change in net interest income was primarily driven by increases of $4.6 billion, or 12.4%, in average loans and $722.9 million, or 3.8%, in average securities, as well as favorable repricing of deposits in conjunction with lower short-term interest rates. These increases were partially offset by a decrease of $3.1 billion, or 49.0%, in average interest-bearing due from banks and $7.5 million in lower purchase accounting accretion income. The funding for these assets was driven by an increase in average interest-bearing deposits of 3.5%, compared to the third quarter of 2025. Net interest margin, on a tax-equivalent basis, increased 28 basis points compared to the same period in 2025, primarily driven by favorable repricing of deposits in conjunction with lower short-term interest rates. Net interest spread increased 39 basis points during the same period. The Company expects to see continued volatility in the economic markets resulting from governmental responses to inflation and recessionary signs in the economy, as well as uncertainty about the impacts of the conflict in Iran and tariffs. These changing conditions could have impacts on the balance sheet and income statement of the Company for the remainder of the year.

Previous wording

The third financial objective is to grow the Company’s revenue from noninterest sources. The Company seeks to grow noninterest revenues throughout all economic and interest rate cycles, while positioning itself to benefit in periods of economic growth. Noninterest income increased $23.3 million, or 10.5%, to $245.5 million for the three months ended June 30, 2026, compared to the same period in 2025. See greater detail below under Noninterest Income. The Company continues to emphasize its asset management, brokerage, bankcard services, healthcare services, and treasury management businesses. For the three months ended June 30, 2026, noninterest income represented 31.6% of total revenue, compared to 32.2% for the same period in 2025. The recent economic changes have impacted fee income, especially those with assets tied to market values and interest rates.

Current wording

The third financial objective is to grow the Company’s revenue from noninterest sources. The Company seeks to grow noninterest revenues throughout all economic and interest rate cycles, while positioning itself to benefit in periods of economic growth. Noninterest income increased $29.1 million, or 14.3%, to $232.4 million for the three months ended September 30, 2026, compared to the same period in 2025. See greater detail below under Noninterest Income. The Company continues to emphasize its asset management, brokerage, bankcard services, healthcare services, and treasury management businesses. For the three months ended September 30, 2026, noninterest income represented 30.1% of total revenue, compared to 30.0% for the same period in 2025. The recent economic changes have impacted fee income, especially those with assets tied to market values and interest rates.

Previous wording

The fourth financial objective is effective capital management. The Company places a significant emphasis on maintaining a strong capital position, which management believes promotes investor confidence, provides access to funding sources under favorable terms, and enhances the Company’s ability to capitalize on business growth and acquisition opportunities. The Company continues to maximize shareholder value through a mix of reinvesting in organic growth, evaluating acquisition opportunities that complement the Company’s strategies, increasing dividends over time, and appropriately utilizing a share repurchase program. At June 30, 2026, the Company had $8.0 billion in total shareholders’ equity. This is an increase of $745.0 million, or 10.2%, compared to total shareholders’ equity at June 30, 2025. At June 30, 2026, the Company had a total risk-based capital ratio of 13.80%. The Company repurchased 38,158 shares of common stock during the second quarter of 2026 at an average price of $132.10. The Company also acquired shares pursuant to the Company's share-based incentive programs.

Current wording

The fourth financial objective is effective capital management. The Company places a significant emphasis on maintaining a strong capital position, which management believes promotes investor confidence, provides access to funding sources under favorable terms, and enhances the Company’s ability to capitalize on business growth and acquisition opportunities. The Company continues to maximize shareholder value through a mix of reinvesting in organic growth, evaluating acquisition opportunities that complement the Company’s strategies, increasing dividends over time, and appropriately utilizing a share repurchase program. At September 30, 2026, the Company had $7.9 billion in total shareholders’ equity. This is an increase of $408.9 million, or 5.5%, compared to total shareholders’ equity at September 30, 2025. At September 30, 2026, the Company had a total risk-based capital ratio of 13.52%. The Company did not repurchase shares of common stock during the third quarter of 2026, other than shares acquired pursuant to the Company's share-based incentive programs.

Previous wording

The following is a summary regarding the Company’s earnings for the second quarter of 2026. The changes identified in the summary are explained in greater detail below. The Company recorded net income available to common shareholders of $271.8 million for the three-month period ended June 30, 2026, compared to net income available to common shareholders of $215.4 million for the same period a year earlier. Basic earnings per common share for the second quarter of 2026 were $3.58 per share ($3.56 per share fully-diluted) compared to $2.84 per common share ($2.82 per share fully-diluted) for the second quarter of 2025. Return on average assets and return on average common shareholders’ equity for the three-month period ended June 30, 2026 were 1.55% and 14.16%, respectively, compared to 1.29% and 12.72%, respectively, for the three-month period ended June 30, 2025.

Current wording

The following is a summary regarding the Company’s earnings for the third quarter of 2026. The changes identified in the summary are explained in greater detail below. The Company recorded net income available to common shareholders of $272.3 million for the three-month period ended September 30, 2026, compared to net income available to common shareholders of $180.4 million for the same period a year earlier. Basic earnings per common share for the third quarter of 2026 were $3.58 per share ($3.56 per share fully-diluted) compared to $2.38 per common share ($2.36 per share fully-diluted) for the third quarter of 2025. Return on average assets and return on average common shareholders’ equity for the three-month period ended September 30, 2026 were 1.53% and 13.83%, respectively, compared to 1.04% and 10.14%, respectively, for the three-month period ended September 30, 2025.

Previous wording

The Company recorded net income available to common shareholders of $527.4 million for the six-month period ended June 30, 2026, compared to net income available to common shareholders of $294.7 million for the same period a year earlier. Basic earnings per common share for the six-month period ended June 30, 2026 were $6.94 per share ($6.90 per share fully-diluted) compared to $4.18 per share ($4.16 per share fully-diluted) for the same period in 2025. Return on average assets and return on average common shareholders’ equity for the six-month period ended June 30, 2026 were 1.51% and 13.93%, respectively, compared to 0.94% and 9.67%, respectively, for the six-month period ended June 30, 2025.

Current wording

The Company recorded net income available to common shareholders of $799.7 million for the nine-month period ended September 30, 2026, compared to net income available to common shareholders of $475.1 million for the same period a year earlier. Basic earnings per common share for the nine-month period ended September 30, 2026 were $10.52 per share ($10.46 per share fully-diluted) compared to $6.57 per share ($6.53 per share fully-diluted) for the same period in 2025. Return on average assets and return on average common shareholders’ equity for the nine-month period ended September 30, 2026 were 1.52% and 13.90%, respectively, compared to 0.98% and 9.84%, respectively, for the nine-month period ended September 30, 2025.

Previous wording

Net interest income for the three and six-month periods ended June 30, 2026 increased $65.5 million, or 14.0%, and increased $202.2 million, or 23.4%, respectively, compared to the same periods in 2025. For the three-month period ended June 30, 2026, average earning assets increased by $3.9 billion, or 6.3%, and for the six-month period ended June 30, 2026, they increased by $6.7 billion, or 11.5%, compared to the same periods in 2025. Net interest margin, on a tax-equivalent basis, increased to 3.32% and 3.35%, respectively, for the three and six-month periods ended June 30, 2026, compared to 3.10% and 3.04%, respectively, for the same periods in 2025.

Current wording

Net interest income for the three and nine-month periods ended September 30, 2026 increased $65.0 million, or 13.7%, and increased $267.2 million, or 19.9%, respectively, compared to the same periods in 2025. For the three-month period ended September 30, 2026, average earning assets increased by $2.5 billion, or 4.0%, and for the nine-month period ended September 30, 2026, they increased by $5.3 billion, or 8.9%, compared to the same periods in 2025. Net interest margin, on a tax-equivalent basis, increased to 3.32% and 3.34%, respectively, for the three and nine-month periods ended September 30, 2026, compared to 3.04% and 3.04%, respectively, for the same periods in 2025.

Previous wording

The provision for credit losses increased by $7.0 million for the three-month period ended June 30, 2026 and decreased by $52.0 million for the six-month period ended June 30, 2026, as compared to the same periods in 2025. Provision expense for the six-month period in 2025 included $62.0 million to establish an allowance for credit losses on the acquired loans designated as non-PCD loans at the close of the transaction. See Note 13, “Acquisition” above. The remainder of the increase in provision was driven by loan growth, portfolio credit metric changes, and ongoing recalibrations of economic loss models in the current period as compared to the prior periods. The Company’s nonperforming loans increased $30.5 million to $127.5 million at June 30, 2026, compared to June 30, 2025. The ACL on loans as a percentage of total loans remained flat at 1.06% as of June 30, 2026, compared to June 30, 2025. For a description of the Company’s methodology for computing the ACL, please see the summary discussion in the “Provision and Allowance for Credit Losses” section included below.

Current wording

The provision for credit losses increased by $8.5 million for the three-month period ended September 30, 2026 and decreased by $43.5 million for the nine-month period ended September 30, 2026, as compared to the same periods in 2025. Provision expense for the nine-month period in 2025 included $62.0 million to establish an allowance for credit losses on the acquired loans designated as non-PCD loans at the close of the transaction. See Note 13, “Acquisition” above. The remainder of the increase in provision was driven by loan growth, general portfolio trends, and ongoing recalibrations of econometric loss models in the current period as compared to the prior periods. The Company’s nonperforming loans decreased $14.1 million to $117.9 million at September 30, 2026, compared to September 30, 2025. The ACL on loans as a percentage of total loans decreased to 1.06% as of September 30, 2026, compared to 1.07% at September 30, 2025. For a description of the Company’s methodology for computing the ACL, please see the summary discussion in the “Provision and Allowance for Credit Losses” section included below.

Previous wording

Noninterest income increased by $23.3 million, or 10.5%, for the three-month period ended June 30, 2026, and increased by $61.9 million, or 15.9%, for the six-month period ended June 30, 2026, compared to the same periods in 2025. These changes are discussed in greater detail below under Noninterest Income.

Current wording

Noninterest income increased by $29.1 million, or 14.3%, for the three-month period ended September 30, 2026, and increased by $91.0 million, or 15.4%, for the nine-month period ended September 30, 2026, compared to the same periods in 2025. These changes are discussed in greater detail below under Noninterest Income.

Previous wording

Noninterest expense increased by $6.5 million, or 1.6%, for the three-month period ended June 30, 2026, and increased by $2.6 million, or 0.3%, for the six-month period ended June 30, 2026, compared to the same periods in 2025. These changes are discussed in greater detail below under Noninterest Expense.

Current wording

Noninterest expense decreased by $19.8 million, or 4.7%, for the three-month period ended September 30, 2026, and decreased by $17.3 million, or 1.4%, for the nine-month period ended September 30, 2026, compared to the same periods in 2025. These changes are discussed in greater detail below under Noninterest Expense.

Previous wording

Net interest income is a significant source of the Company’s earnings and represents the amount by which interest income on earning assets exceeds the interest expense paid on liabilities. The volume of interest-earning assets and the related funding sources, the overall mix of these assets and liabilities, and the rates paid on each affect net interest income. Net interest income for the three and six-month periods ended June 30, 2026 increased $65.5 million, or 14.0%, and increased $202.2 million, or 23.4%, compared to the same periods in 2025. The change in net interest income was primarily driven by favorable repricing of deposits in conjunction with lower short-term interest rates, and increases in average loans and average securities. These increases were partially offset by decreases in average interest-bearing due from banks and purchase accounting accretion income.

Current wording

Net interest income is a significant source of the Company’s earnings and represents the amount by which interest income on earning assets exceeds the interest expense paid on liabilities. The volume of interest-earning assets and the related funding sources, the overall mix of these assets and liabilities, and the rates paid on each affect net interest income. Net interest income for the three and nine-month periods ended September 30, 2026 increased $65.0 million, or 13.7%, and increased $267.2 million, or 19.9%, compared to the same periods in 2025. The change in net interest income was primarily driven by favorable repricing of deposits in conjunction with lower short-term interest rates, and increases in average loans and average securities. These increases were partially offset by decreases in average interest-bearing due from banks and purchase accounting accretion income.

Previous wording

Table 1 shows the impact of earning asset rate changes compared to changes in the cost of interest-bearing liabilities. As illustrated in this table, net interest spread for the three months ended June 30, 2026 increased 34 basis points as compared to the same period in 2025. Net interest margin for the three months ended June 30, 2026 increased 22 basis points compared to the same period in 2025. Net interest spread for the six-month period ended June 30, 2026 increased by 44 basis points as compared to the same period in 2025. Net interest margin for the six-month period ended June 30, 2026 increased by 31 basis points compared to the same period in 2025. The change is driven by favorable repricing of deposits in conjunction with lower short-term interest rates. The cost of interest-bearing liabilities decreased 54 basis points from the second quarter of 2025 while the yield on earning assets decreased 20 basis points compared to the same period. The cost of interest-bearing liabilities decreased 54 basis points for the six-month period ended June 30, 2026 as compared to the same period in 2025 while the yield on earning assets decreased 10 basis points compared to the same period. Earning asset balance increases have been primarily driven by higher average loans and increased securities balances, partially offset by decreased interest-bearing due from banks balances. These variances have led to an increase in the Company’s net interest income during 2026, as compared to results for the same periods in 2025. The Company expects to see continued volatility in the economic markets and governmental responses to changes in the economy. These changing conditions could have impacts on the balance sheet and income statement of the Company for the remainder of the year. For the impact of the contribution from free funds, see the Analysis of Net Interest Margin within Table 2 below. Table 2 also illustrates how the changes in volume and interest rates have resulted in an increase in net interest income.

Current wording

Table 1 shows the impact of earning asset rate changes compared to changes in the cost of interest-bearing liabilities. As illustrated in this table, net interest spread for the three months ended September 30, 2026 increased 39 basis points as compared to the same period in 2025. Net interest margin for the three months ended September 30, 2026 increased 28 basis points compared to the same period in 2025. Net interest spread for the nine-month period ended September 30, 2026 increased by 43 basis points as compared to the same period in 2025. Net interest margin for the nine-month period ended September 30, 2026 increased by 30 basis points compared to the same period in 2025. The change is driven by favorable repricing of deposits in conjunction with lower short-term interest rates. The cost of interest-bearing liabilities decreased 51 basis points from the third quarter of 2025 while the yield on earning assets decreased 12 basis points compared to the same period. The cost of interest-bearing liabilities decreased 54 basis points for the nine-month period ended September 30, 2026 as compared to the same period in 2025 while the yield on earning assets decreased 11 basis points compared to the same period. Earning asset balance increases have been primarily driven by higher average loans and increased securities balances, partially offset by decreased interest-bearing due from banks balances. These variances have led to an increase in the Company’s net interest income during 2026, as compared to results for the same periods in 2025. The Company expects to see continued volatility in the economic markets and governmental responses to changes in the economy. These changing conditions could have impacts on the balance sheet and income statement of the Company for the remainder of the year. For the impact of the contribution from free funds, see the Analysis of Net Interest Margin within Table 2 below. Table 2 also illustrates how the changes in volume and interest rates have resulted in an increase in net interest income.

Previous wording

The following table presents, for the periods indicated, the average earning assets and resulting yields, as well as the average interest-bearing liabilities and resulting yields, expressed in both dollars and rates. All average balances are daily average balances. The average yield on earning assets without the tax-equivalent basis adjustment would have been 5.35% for the three-month period ended June 30, 2026, and 5.55% for the same period in 2025. The average yield on earning assets without the tax-equivalent basis adjustment would have been 5.37% for the six-month period ended June 30, 2026, and 5.48% for the same period in 2025.

Current wording

The following table presents, for the periods indicated, the average earning assets and resulting yields, as well as the average interest-bearing liabilities and resulting yields, expressed in both dollars and rates. All average balances are daily average balances. The average yield on earning assets without the tax-equivalent basis adjustment would have been 5.41% for the three-month period ended September 30, 2026, and 5.53% for the same period in 2025. The average yield on earning assets without the tax-equivalent basis adjustment would have been 5.39% for the nine-month period ended September 30, 2026, and 5.49% for the same period in 2025.

Previous wording

Table 2 presents the dollar amount of change in net interest income and margin due to volume and rate. Table 2 also reflects the effect that interest-free funds have on net interest margin. The average balance of interest-free funds (total earning assets less interest-bearing liabilities) increased $1.7 billion and increased $2.4 billion for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. The benefit from interest-free funds decreased 12 basis points and 13 points, respectively, in the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025.

Current wording

Table 2 presents the dollar amount of change in net interest income and margin due to volume and rate. Table 2 also reflects the effect that interest-free funds have on net interest margin. The average balance of interest-free funds (total earning assets less interest-bearing liabilities) increased $1.0 billion and $1.9 billion for the three and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. The benefit from interest-free funds decreased 11 basis points and 13 basis points in the three and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025.

Previous wording

The ending result of this process is a recorded consolidated ACL that represents management’s best estimate of the total expected losses included in the loan portfolio, held-to-maturity securities, and credit deterioration in available-for-sale securities.

Current wording

The end result of this process is a recorded consolidated ACL that represents management’s best estimate of the total expected losses included in the loan portfolio, held-to-maturity securities, and credit deterioration in available-for-sale securities.

Previous wording

Based on the factors above, management of the Company recorded $28.0 million as provision for credit losses for the three-month period ended June 30, 2026, as compared to $21.0 million for the same period in 2025. For the six-month period ended June 30, 2026, management of the Company recorded $55.0 million as provision for credit losses, as compared to $107.0 million for the same period in 2025. As noted above, $62.0 million was recorded to establish an allowance for credit losses on the acquired loans designated as non-PCD loans at the close of the HTLF acquisition in the first quarter of 2025. See Note 13, “Acquisition” above. The increase in the three-month period and the remaining $10.0 million increase in provision in the six-month period is the result of applying the methodology for computing the ACL, coupled with the impacts of the current and forecasted economic environment. As illustrated in Table 3 below, the ACL on loans remained flat at 1.06% of total loans as of June 30, 2026, compared to June 30, 2025.

Current wording

Based on the factors above, management of the Company recorded $31.0 million as provision for credit losses for the three-month period ended September 30, 2026, as compared to $22.5 million for the same period in 2025. For the nine-month period ended September 30, 2026, management of the Company recorded $86.0 million as provision for credit losses, as compared to $129.5 million for the same period in 2025. As noted above, $62.0 million was recorded to establish an allowance for credit losses on the acquired loans designated as non-PCD loans at the close of the HTLF acquisition in the first quarter of 2025. See Note 13, “Acquisition” above. The increase in the three-month period and the remaining $18.5 million increase in provision in the nine-month period is the result of applying the methodology for computing the ACL, coupled with the impacts of the current and forecasted economic environment. As illustrated in Table 3 below, the ACL was 1.06% of total loans as of September 30, 2026, compared to 1.07% as of September 30, 2025.

Previous wording

Table 3 presents a summary of the Company’s ACL for the six-month periods ended June 30, 2026 and 2025, and for the year ended December 31, 2025. Net charge-offs were $34.8 million for the six-month period ended June 30, 2026, compared to $51.3 million for the same period in 2025. See “Credit Risk Management” under “Item 3. Quantitative and Qualitative Disclosures About Market Risk” in this report for information relating to nonaccrual loans, past due loans, restructured loans and other credit risk matters.

Current wording

Table 3 presents a summary of the Company’s ACL for the nine-month periods ended September 30, 2026 and 2025, and for the year ended December 31, 2025. Net charge-offs were $48.8 million for the nine-month period ended September 30, 2026, compared to $69.7 million for the same period in 2025. See “Credit Risk Management” under “Item 3. Quantitative and Qualitative Disclosures About Market Risk” in this report for information relating to nonaccrual loans, past due loans, restructured loans and other credit risk matters.

Previous wording

Noninterest income increased by $23.3 million, or 10.5%, during the three-month period ended June 30, 2026, and increased $61.9 million, or 15.9%, during the six-month period ended June 30, 2026, compared to the same periods in 2025. Table 4 above summarizes the components of noninterest income and the respective year-over-year comparison for each category.

Current wording

Noninterest income increased by $29.1 million, or 14.3%, during the three-month period ended September 30, 2026, and increased $91.0 million, or 15.4%, during the nine-month period ended September 30, 2026, compared to the same periods in 2025. Table 4 above summarizes the components of noninterest income and the respective year-over-year comparison for each category.

Previous wording

Trust and securities processing income consists of fees earned on personal and corporate trust accounts, custody of securities services, trust investments and wealth management services, mutual fund assets, and alternative asset servicing. The increase in these fees for the three and six-month periods ended June 30, 2026, compared to the same periods in 2025, was primarily due to an increase in trust services income, fund services revenue, and corporate trust revenue. For the three-month period ended June 30, 2026, fund services revenue increased $9.1 million, or 20.2%, corporate trust revenue increased $3.9 million, or 21.7%, and trust income increased $2.0 million, or 10.0%, compared to the same period in 2025. For the six-month period ended June 30, 2026, fund services revenue increased $18.0 million, or 20.3%, corporate trust revenue increased $7.3 million, or 20.6%, and trust services revenue increased $4.7 million, or 11.9%, compared to the same period in 2025. The recent volatile markets have impacted the income in this category. Since trust and securities processing fees are primarily asset-based, which are highly correlated to the change in market value of the assets, the related income for the remainder of the year will be affected by changes in the securities markets. Management continues to emphasize sales of services to both new and existing clients as well as increasing and improving the distribution channels.

Current wording

Trust and securities processing income consists of fees earned on personal and corporate trust accounts, custody of securities services, trust investments and wealth management services, mutual fund assets, and alternative asset servicing. The increase in these fees for the three and nine-month periods ended September 30, 2026, compared to the same periods in 2025, was primarily due to an increase in fund services revenue, corporate trust revenue, and trust services revenue. For the three-month period ended September 30, 2026, fund services revenue increased $12.0 million, or 25.5%, corporate trust revenue increased $2.9 million, or 15.0%, and trust services income increased $1.2 million, or 5.5%, compared to the same period in 2025. For the nine-month period ended September 30, 2026, fund services revenue increased $30.0 million, or 22.1%, corporate trust revenue increased $10.2 million, or 18.6%, and trust services revenue increased $5.8 million, or 9.6%, compared to the same period in 2025. The recent volatile markets have impacted the income in this category. Since trust and securities processing fees are primarily asset-based, which are highly correlated to the change in market value of the assets, the related income for the remainder of the year will be affected by changes in the securities markets. Management continues to emphasize sales of services to both new and existing clients as well as increasing and improving the distribution channels.

Previous wording

Brokerage fees for the three-month period ended June 30, 2026 increased $4.9 million, or 23.8%, and increased $7.9 million, or 20.4%, for the six-month period ended June 30, 2026, compared to the same periods in 2025. The changes in the three-month and six-month periods were driven by 12b-1 fees and money market share revenue.

Current wording

Brokerage fees for the three-month period ended September 30, 2026 increased $3.7 million, or 18.1%, and increased $11.6 million, or 19.6%, for the nine-month period ended September 30, 2026, compared to the same periods in 2025. The changes in the three-month and nine-month periods were driven by increased 12b-1 fees and money market share revenue.

Previous wording

Investment securities gains, net for the three and six-month periods ended June 30, 2026 decreased $10.6 million, or 28.1%, and decreased $2.8 million, or 8.4%, respectively, compared to the same periods in 2025. The decrease for the three-month period ended June 30, 2026, was primarily driven by the pre-tax gain of $29.4 million on the company's investment in Voyager Technologies, Inc., which completed its initial public offering in June 2025, and pre-tax gains of $8.2 million on the sale of two non-marketable investments, all recognized in the second quarter of 2025. This is compared to a $17.9 million gain on the sale of a non-marketable security and increases of $9.1 million in valuation of the company's non-marketable securities in the second quarter of 2026. The decrease for the six-month period ended June 30, 2026 was further impacted by a gain of $3.0 million on the sale of a non-marketable security in the first quarter of 2026, coupled with declines of $5.4 million in valuation of the Company’s non-marketable securities in the six-month period ended June 30, 2025. The income in this category is highly correlated to the change in market value of the assets, and the related income for the remainder of the year will be affected by changes in the securities markets. The Company’s investment portfolio is continually evaluated for opportunities to improve its performance and risk profile relative to market conditions and the Company’s interest rate expectations. This can result in differences from quarter to quarter in the amount of realized gains or losses on this portfolio.

Current wording

Investment securities gains, net for the three and nine-month periods ended September 30, 2026 increased $15.1 million, or 369.0%, and increased $12.3 million, or 42.8%, respectively, compared to the same periods in 2025. The increase for the three-month period ended September 30, 2026, was primarily driven by increases of $7.2 million in valuation of the Company’s securities without readily determinable fair value, as well as $7.1 million in net losses on the Company’s securities with readily determinable fair value during the third quarter of 2025. The increase for the nine-month period ended September 30, 2026 was driven by a $17.9 million gain on the sale of a security without readily determinable fair value and increases of $16.4 million in valuation of the Company’s securities without readily determinable fair value, both during 2026, offset by $20.9 million in net gains on the Company’s investment in Voyager Technologies, Inc. in 2025, which completed its initial public offering in June 2025. The income in this category is highly correlated to the change in market value of the assets, and the related income for the remainder of the year will be affected by changes in the securities markets. The Company’s investment portfolio is continually evaluated for opportunities to improve its performance and risk profile relative to market conditions and the Company’s interest rate expectations. This can result in differences from quarter to quarter in the amount of realized gains or losses on this portfolio.

Previous wording

Other noninterest income for the three-month period ended June 30, 2026, increased $13.2 million, or 80.1%, compared to the same period in 2025, primarily driven by a $8.8 million increase in company-owned life insurance income, $2.5 million increase in bank-owned life insurance income, and a $1.0 million increase in derivative income. For the six-month period, other noninterest income increased $19.6 million, or 65.9%, compared to the same period in 2025. This increase is driven by increases of $7.6 million in company-owned life insurance income, $4.2 million in bank-owned life insurance income, $2.3 million in derivative income, and $1.8 million in syndication income.

Current wording

Other noninterest income for the three-month period ended September 30, 2026, decreased $6.1 million, or 18.6%, compared to the same period in 2025, primarily driven by a $5.5 million decrease in company-owned life insurance income and a $2.0 million decrease in bank-owned life insurance income, partially offset by an increase of $1.3 million in syndication income. For the nine-month period, other noninterest income increased $13.5 million, or 21.5%, compared to the same period in 2025. This increase is driven by increases of $3.1 million in syndication income, $2.7 million in derivative income, $2.2 million in bank-owned life insurance income, and $2.1 million in company-owned life insurance income.

Previous wording

Noninterest expense increased $6.5 million, or 1.6%, and increased $2.6 million, or 0.3%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. Table 5 above summarizes the components of noninterest expense and the respective year-over-year comparison for each category. For the first six months of 2026, noninterest expense included $6.0 million in total acquisition-related and other nonrecurring costs, compared to $66.7 million in the same period in 2025.

Current wording

Noninterest expense decreased $19.8 million, or 4.7%, and decreased $17.3 million, or 1.4%, for the three and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. Table 5 above summarizes the components of noninterest expense and the respective year-over-year comparison for each category. For the first nine months of 2026, noninterest expense included $6.1 million in total acquisition-related and other nonrecurring costs, compared to $102.3 million in the same period in 2025.

Previous wording

Salaries and employee benefits increased by $13.6 million, or 6.4%, and increased $11.9 million, or 2.7%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. Salaries and wages expense increased $0.9 million, or 0.7%, and increased $14.5 million, or 6.1%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. Bonus and commission expense increased $0.1 million, or 0.3%, and decreased $21.2 million, or 16.8%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. Employee benefits expense increased $12.5 million, or 38.4%, and increased $18.6 million, or 26.3%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. The variances in salaries and employee benefits are primarily driven by higher deferred compensation expense, coupled with increased bonus and commission expense due to higher company performance, partially offset by severance, retention bonuses, and change in control payments made to HTLF associates in 2025.

Current wording

Salaries and employee benefits increased by $0.9 million, or 0.4%, and increased $12.8 million, or 2.0%, for the three and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. Salaries and wages expense increased $3.0 million, or 2.4%, and increased $17.5 million, or 4.8%, for the three and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. The increases in salaries and wages are due to higher employee salaries. Bonus and commission expense increased $2.8 million, or 5.3%, and decreased $18.4 million, or 10.2%, for the three and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. The increase in bonus and commission expense for the three-month period is due to higher company performance, while the decrease for the nine-month period is primarily related to severance, retention bonuses, and change in control payments made to HTLF associates in 2025. Employee benefits expense decreased $4.9 million, or 12.5%, and increased $13.7 million, or 12.4%, for the three and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. The decrease in employee benefits for the three-month period is primarily driven by a decrease in deferred compensation expense, while the increase for the nine-month period is due to higher medical insurance expense.

Previous wording

Occupancy expense increased $0.7 million, or 3.8%, and $3.7 million, or 10.7%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to increased depreciation expense related to assets acquired from the HTLF acquisition and higher building repair expense.

Current wording

Occupancy expense increased $2.1 million, or 10.8%, and $5.8 million, or 10.7%, for the three and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025, primarily due to increased depreciation expense related to assets acquired from the HTLF acquisition and increased building repair expense.

Previous wording

Equipment expense decreased $2.5 million, or 15.1%, and $6.1 million, or 18.3%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to lower software maintenance and amortization expense.

Current wording

Equipment expense decreased $2.5 million, or 15.2%, and $8.6 million, or 17.3%, for the three and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025, primarily due to lower software maintenance and amortization expense.

Previous wording

Marketing and business development expense increased $2.6 million, or 22.7%, and $8.4 million, or 43.3%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to the timing of advertising campaigns and higher travel and entertainment expense.

Current wording

Marketing and business development expense increased $4.2 million, or 37.8%, and $12.6 million, or 41.3%, for the three and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025, primarily due to the timing of various advertising campaigns and increased travel and entertainment expense.

Previous wording

Legal and consulting expense decreased $4.1 million, or 21.9%, and $23.6 million, or 50.1%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. The decrease in both periods is primarily due to decreases in non-recurring transaction costs associated with the acquisition in 2025.

Current wording

Legal and consulting expense decreased $6.7 million, or 31.2%, and $30.3 million, or 44.1%, for the three and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. The decrease in both periods is primarily due to decreases in non-recurring transaction costs associated with the HTLF acquisition in 2025.

Previous wording

Amortization of other intangible assets decreased $1.8 million, or 7.2%, and increased $4.2 million, or 9.8%, for the three and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. The decrease in the three-month period ended June 30, 2026 is primarily due to a decrease of amortization related to the core deposit intangible recognized from the HTLF acquisition. The increase in the six-month period ended June 30, 2026 is related to the timing of the HTLF acquisition in the first quarter of 2025.

Current wording

Amortization of other intangible assets decreased $2.1 million, or 8.2%, and increased $2.1 million, or 3.1%, for the three and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. The decrease in the three-month period ended September 30, 2026 is primarily due to a decrease of amortization related to the core deposit intangible recognized from the HTLF acquisition. The increase in the nine-month period ended September 30, 2026 is related to the timing of the HTLF acquisition in the first quarter of 2025.

Previous wording

The Company’s effective tax rate was 20.9% for the six months ended June 30, 2026, compared to 18.8% for the same period in 2025. The increase in the effective tax rate in 2026 is mainly due to more favorable discrete tax items in 2025, including a benefit from remeasuring deferred tax assets after the HTLF acquisition increased the state marginal tax rate. Additionally, a smaller proportion of pre-tax income in 2026 was earned from tax-exempt municipal securities.

Current wording

The Company’s effective tax rate was 20.2% for the nine months ended September 30, 2026, compared to 19.4% for the same period in 2025. The increase in the effective tax rate in 2026 is mainly due to more favorable discrete tax items in 2025, including a benefit from remeasuring deferred tax assets after the HTLF acquisition increased the state marginal tax rate. Additionally, a smaller proportion of pre-tax income in 2026 was earned from tax-exempt municipal securities.

Previous wording

For the six-month period ended June 30, 2026, Commercial Banking net income increased $148.8 million, or 73.9%, to $350.2 million, compared to the same period in 2025. Net interest income increased $131.4 million, or 22.0%, for the six-month period ended June 30, 2026, compared to the same period in 2025, primarily driven by organic loan growth, an additional month of activity from the acquisition of HTLF, and earning asset mix changes. Provision for credit losses decreased $36.6 million for the period, driven by the acquisition of HTLF as well as portfolio metric changes and ongoing recalibrations of economic loss models in 2026 as compared to 2025. Noninterest income increased $17.8 million, or 22.1%, compared to the same period in 2025, primarily due to increases of $12.8 million in other income driven by increases in gains recorded for recoveries of loans previously charged off by HTLF and increased derivative income, syndication income, and life insurance income, coupled with increases of $2.6 million in bankcard fees and $1.9 million in deposit service charges. Noninterest expense decreased $9.0 million, or 2.6%, to $334.7 million for the six-month period ended June 30, 2026, compared to the same period in 2025. This decrease was driven by a decrease of $17.5 million in technology, service, and overhead expenses, partially offset by increases of $3.9 million in marketing and business development, $3.1 million in salaries and employee benefits, and $2.1 million in other noninterest expense.

Current wording

For the nine-month period ended September 30, 2026, Commercial Banking net income increased $190.3 million, or 55.0%, to $536.2 million, compared to the same period in 2025. Net interest income increased $175.7 million, or 18.9%, for the nine-month period ended September 30, 2026, compared to the same period in 2025, primarily driven by organic loan growth, an additional month of activity from the acquisition of HTLF, and earning asset mix changes. Provision for credit losses decreased $28.1 million for the period, driven by the acquisition of HTLF as well as portfolio metric changes and ongoing recalibrations of economic loss models in 2026 as compared to 2025. Noninterest income increased $13.1 million, or 9.6%, compared to the same period in 2025, primarily due to increases of $6.6 million in other income driven by increased syndication income, derivative income, and life insurance income, coupled with increases of $3.6 million in deposit service charges and $2.4 million in bankcard fees. Noninterest expense decreased $25.4 million, or 4.8%, to $505.3 million for the nine-month period ended September 30, 2026, compared to the same period in 2025. This decrease was driven by a decrease of $42.6 million in technology, service, and overhead expenses, partially offset by increases of $5.8 million in marketing and business development, $5.8 million in other noninterest expense driven by operational losses and expense on other real estate owned, and $5.3 million in salaries and employee benefits.

Previous wording

For the six-month period ended June 30, 2026, Institutional Banking net income increased $32.8 million, or 32.0%, to $135.0 million, compared to the same period last year. Net interest income increased $28.8 million, or 22.6%, compared to the same period last year, due to an increase in funds transfer pricing resulting from higher deposit balances. Provision for credit losses increased $0.3 million for the period, driven by portfolio metric changes and ongoing recalibrations of economic loss models in 2026 compared to 2025. Noninterest income increased $39.2 million, or 18.5%, to $251.0 million for the six-month period June 30, 2026, compared to the same period in 2025. This increase was due to increases of $25.3 million in trust and securities processing income driven by higher fund services and corporate trust revenue, $8.2 million in brokerage income due to increased 12b-1 and money market revenue, $2.9 million in other income due to increased foreign currency valuation changes, $1.3 million in bankcard fees, and $1.0 million in bond trading income. Noninterest expense increased $23.1 million, or 10.9%, primarily driven by increases of $9.5 million in salaries and employee benefits expense, $8.5 million increase in technology, service, and overhead expense, $1.4 million in bankcard expense, $1.2 million in other noninterest expense, $0.9 million in legal and consulting expense, and $0.9 million in marketing and business development.

Current wording

For the nine-month period ended September 30, 2026, Institutional Banking net income increased $49.1 million, or 31.8%, to $203.2 million, compared to the same period in 2025. Net interest income increased $41.6 million, or 22.1%, compared to the same period in 2025, due to an increase in funds transfer pricing resulting from higher deposit balances. Provision for credit losses increased $0.4 million for the period, driven by portfolio metric changes and ongoing recalibrations of economic loss models in 2026 compared to 2025. Noninterest income increased $57.1 million, or 17.5%, to $384.3 million for the nine-month period ended September 30, 2026, compared to the same period in 2025. This increase was due to increases of $40.3 million in trust and securities processing income driven by higher fund services and corporate trust revenue, $12.1 million in brokerage income due to increased 12b-1 and money market revenue, $3.2 million in other income due to increased foreign currency valuation changes and reverse repurchase commitment fees, and $1.4 million in bankcard fees. Noninterest expense increased $35.1 million, or 10.9%, primarily driven by increases of $15.6 million in salaries and employee benefits expense, $11.9 million in technology, service, and overhead expense, $2.8 million in processing fees driven by software subscription fees, $1.7 million in marketing and business development, $1.4 million in legal and consulting expense, and $1.3 million in other noninterest expense driven by operational losses.

Previous wording

For the six-month period ended June 30, 2026, Personal Banking net income improved $58.7 million, or 1,176.4%, to net income of $53.7 million, as compared to a net loss of $5.0 million in the same period in 2025. Net interest income increased $42.0 million, or 29.9%, compared to the same period last year driven by organic loan growth, an additional month of activity from the acquisition of HTLF, and earning asset mix changes. Provision for credit losses decreased $15.7 million for the period, driven by the acquisition of HTLF as well as by portfolio metric changes and ongoing recalibrations of economic loss models in 2026 as compared to 2025. Noninterest income increased $4.9 million, or 5.1%, for the same period primarily driven by increases of $4.1 million in trust and securities processing income and $2.6 million in other income driven by increases in gains recorded for recoveries of loans previously charged off by HTLF and increased life insurance income, partially offset by a $2.2 million decline in investment securities gains. Noninterest expense decreased $11.5 million, or 5.2%, primarily due to decreases of $12.1 million in technology, service, and overhead expenses, $3.6 million in other noninterest expense driven by reduced charitable contributions, and $1.7 million in bankcard expenses, partially offset by increases of $2.9 million in salaries and employee benefits expense and $2.8 million in marketing and business development.

Current wording

For the nine-month period ended September 30, 2026, Personal Banking net income improved $90.7 million, or 701.3%, to net income of $77.7 million, as compared to a net loss of $12.9 million in the same period in 2025. Net interest income increased $49.9 million, or 22.4%, compared to the same period in 2025 driven by organic loan growth, an additional month of activity from the acquisition of HTLF, and earning asset mix changes. Provision for credit losses decreased $15.8 million for the period, driven by the acquisition of HTLF as well as by portfolio metric changes and ongoing recalibrations of economic loss models in 2026 as compared to 2025. Noninterest income increased $20.8 million, or 16.2%, for the same period, primarily driven by increases of $14.5 million in investment securities gains, $5.1 million in trust and securities processing income, and $0.6 million in other income driven by increased life insurance income. Noninterest expense decreased $27.0 million, or 7.9%, primarily due to decreases of $26.6 million in technology, service, and overhead expenses, $2.4 million in bankcard expenses, $2.2 million in other noninterest expense driven by reduced charitable contributions, and $2.1 million in supplies and services expenses, partially offset by increases of $4.2 million in marketing and business development and $2.5 million in salaries and employee benefits expense.

Previous wording

Total assets of the Company decreased $838.5 million, or 1.1%, as of June 30, 2026, compared to December 31, 2025, primarily due to decreases of $2.0 billion, or 28.7%, and $172.7 million, or 18.1%, in interest-bearing due from banks and cash and due from banks, respectively, coupled with decreases of $619.7 million, or 40.0%, in securities purchased under agreements to resell and $221.0 million, or 1.6%, in securities available for sale. These decreases were partially offset by an increase of $2.4 billion, or 6.1%, in loans balances.

Current wording

Total assets of the Company decreased $356.0 million, or 0.5%, as of September 30, 2026, compared to December 31, 2025, primarily due to decreases of $2.6 billion, or 38.1%, and $239.9 million, or 25.2%, in interest-bearing due from banks and cash and due from banks, respectively, coupled with decreases of $700.8 million, or 5.1%, in securities available for sale and $596.9 million, or 38.6%, in securities purchased under agreements to resell. These decreases were partially offset by an increase of $3.8 billion, or 9.7%, in loan balances.

Previous wording

Total assets of the Company increased $495.4 million, or 0.7%, as of June 30, 2026, compared to June 30, 2025, primarily due to increases of $4.3 billion, or 11.8%, in loan balances and $1.3 billion, or 10.9%, in securities available for sale, partially offset by a decrease of $5.1 billion, or 50.6%, in interest-bearing due from banks.

Current wording

Total assets of the Company increased $856.9 million, or 1.2%, as of September 30, 2026, compared to September 30, 2025, primarily due to increases of $4.8 billion, or 12.8%, in loan balances and $186.1 million, or 24.3%, in securities purchased under agreements to resell, partially offset by decreases of $3.6 billion, or 45.6%, in interest-bearing due from banks, $370.0 million, or 2.8%, in securities available for sale, and $360.3 million, or 33.6%, in cash and due from banks balances.

Previous wording

Actual loan balances totaled $41.1 billion as of June 30, 2026, and increased $2.4 billion, or 6.1%, compared to December 31, 2025, and increased $4.3 billion, or 11.8%, compared to June 30, 2025. Compared to December 31, 2025, commercial and industrial loans increased $1.7 billion, or 10.3%, leases and other loans increased $261.8 million, or 109.8%, and commercial real estate loans increased $191.1 million, or 1.2%. Compared to June 30, 2025, commercial and industrial loans increased $3.3 billion, or 22.5%, leases and other loans increased $398.4 million, or 391.2%, commercial real estate loans increased $382.4 million, or 2.4%, and consumer real estate loans increased $221.0 million, or 5.1%.

Current wording

Actual loan balances totaled $42.5 billion as of September 30, 2026, and increased $3.8 billion, or 9.7%, compared to December 31, 2025, and increased $4.8 billion, or 12.8%, compared to September 30, 2025. Compared to December 31, 2025, commercial and industrial loans increased $3.0 billion, or 18.3%, leases and other loans increased $228.2 million, or 95.7%, specialty lending increased $211.6 million, or 40.8%, and commercial real estate loans increased $210.8 million, or 1.3%. Compared to September 30, 2025, commercial and industrial loans increased $4.1 billion, or 26.7%, leases and other loans increased $358.5 million, or 331.6%, and consumer real estate loans increased $198.9 million, or 4.6%.

Previous wording

As of June 30, 2026 and December 31, 2025, commercial real estate loans comprised approximately 40.3% and 42.2%, respectively, of the Company's loan portfolio. Commercial real estate loans generally involve a greater degree of credit risk than consumer real estate loans because they typically have larger balances and are more affected by adverse conditions in the economy. Because payments on loans secured by commercial real estate often depend upon the successful operation and management of the properties and the businesses which operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy or changes in government regulations. In recent years, commercial real estate markets have been particularly impacted by the economic disruption and the evolution of various remote work options, which could impact the long-term performance of some types of office properties within our commercial real estate portfolio. Due to these risks, the Company is actively monitoring its exposure to commercial real estate.

Current wording

As of September 30, 2026 and December 31, 2025, commercial real estate loans comprised approximately 39.0% and 42.2%, respectively, of the Company's loan portfolio. Commercial real estate loans generally involve a greater degree of credit risk than consumer real estate loans because they typically have larger balances and are more affected by adverse conditions in the economy. Because payments on loans secured by commercial real estate often depend upon the successful operation and management of the properties and the businesses which operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy or changes in government regulations. In recent years, commercial real estate markets have been particularly impacted by the economic disruption and the evolution of various remote work options, which could impact the long-term performance of some types of office properties within our commercial real estate portfolio. Due to these risks, the Company is actively monitoring its exposure to commercial real estate.

Previous wording

Generally, these loans are made for investment and real estate development or working capital and business expansion purposes and are primarily secured by real estate with a maximum loan-to-value of 80%. Most of these properties are non-owner occupied and have guarantees as additional security. The Company’s investment CRE portfolio (which includes non-owner occupied and construction loans) totaled 25.7% and 27.5% of total Company loans as of June 30, 2026 and December 31, 2025, respectively. The average investment CRE loan was approximately $4.0 million and $3.6 million, as of June 30, 2026 and December 31, 2025, respectively.

Current wording

Generally, these loans are made for investment and real estate development or working capital and business expansion purposes and are primarily secured by real estate with a maximum loan-to-value of 80%. Most of these properties are non-owner occupied and have guarantees as additional security. The Company’s investment CRE portfolio (which includes non-owner occupied and construction loans) totaled 24.7% and 27.5% of total Company loans as of September 30, 2026 and December 31, 2025, respectively. The average investment CRE loan was approximately $4.0 million and $3.6 million, as of September 30, 2026 and December 31, 2025, respectively.