FIRST MID BANCSHARES, INC.

Previous wording

The following discussion and analysis is intended to provide a better understanding of the consolidated financial condition and results of operations of the Company and its subsidiaries for the three and six months ended June 30, 2026 and 2025. This discussion and analysis should be read in conjunction with the consolidated financial statements, related notes and selected financial data appearing elsewhere in this report.

Current wording

The following discussion and analysis is intended to provide a better understanding of the consolidated financial condition and results of operations of the Company and its subsidiaries for the three and nine months ended September 30, 2026 and 2025. This discussion and analysis should be read in conjunction with the consolidated financial statements, related notes and selected financial data appearing elsewhere in this report.

Previous wording

This document may contain certain forward-looking statements about the Company, such as discussions of the Company’s pricing and fee trends, credit quality and outlook, liquidity, new business results, expansion plans, anticipated expenses and planned schedules. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company are identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. Actual results could differ materially from the results indicated by these statements because the realization of those results is subject to many risks and uncertainties, including, among other things, the possibility that any of the anticipated benefits of the transactions between First Mid and Two Rivers will not be realized within the expected time period; the risk that integration of the operations of Two Rivers with First Mid will be more costly or difficult than expected; the effect of the announcement of the transactions and integration of the operations of Two Rivers on customer relationships and operating results; the possibility that the transactions may be more expensive to complete than anticipated, including as a result of unexpected factors or events; changes in interest rates; general economic conditions and those in the market areas of the Company; legislative and/or regulatory changes; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of the Company’s loan or investment portfolios and the valuation of those investment portfolios; demand for loan products; deposit flows; competition; demand for financial services in the market areas of the Company; accounting principles, policies and guidelines; or any of the other foregoing risks. Additional information concerning the Company, including additional factors and risks that could materially affect the Company’s financial results, are included in the Company’s filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the SEC, the Company does not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

Current wording

This document may contain certain forward-looking statements about the Company, such as discussions of the Company’s pricing and fee trends, credit quality and outlook, liquidity, new business results, expansion plans, anticipated expenses and planned schedules. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company are identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. Actual results could differ materially from the results indicated by these statements because the realization of those results is subject to many risks and uncertainties, including, among other things, the possibility that any of the anticipated benefits of the transactions between First Mid and Two Rivers will not be realized within the expected time period; the risk that integration of the operations of Two Rivers with First Mid will be more costly or difficult than expected; the effect of the announcement of the transactions and integration of the operations of Two Rivers on customer relationships and operating results; with respect to the proposed Evergreen Merger, the ability to obtain required regulatory and Evergreen shareholder approvals and to satisfy other closing conditions on the expected timeline or at all, the occurrence of any event that could give rise to termination of the Evergreen Merger Agreement, and the risk that the anticipated benefits of the Evergreen Merger will not be realized; the possibility that the transactions may be more expensive to complete than anticipated, including as a result of unexpected factors or events; changes in interest rates; general economic conditions and those in the market areas of the Company; legislative and/or regulatory changes; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of the Company’s loan or investment portfolios and the valuation of those investment portfolios; demand for loan products; deposit flows; competition; demand for financial services in the market areas of the Company; accounting principles, policies and guidelines; or any of the other foregoing risks. Additional information concerning the Company, including additional factors and risks that could materially affect the Company’s financial results, are included in the Company’s filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the SEC, the Company does not undertake any obligation to update or review any forward-loo…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Net income was $54.1 million and $45.6 million for the six months ended June 30, 2026 and 2025, respectively, and diluted net income per common share was $2.10 and $1.90 for the six months ended June 30, 2026 and 2025, respectively.

Current wording

Net income was $87.4 million and $68.1 million for the nine months ended September 30, 2026 and 2025, respectively, and diluted net income per common share was $3.36 and $2.84 for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Total assets were $9.2 billion at June 30, 2026, compared to $8.0 billion as of December 31, 2025. Net loan balances were $6.8 billion at June 30, 2026 compared to $5.9 billion at December 31, 2025.

Current wording

Total assets were $9.4 billion at September 30, 2026, compared to $8.0 billion as of December 31, 2025. Net loan balances were $6.8 billion at September 30, 2026 compared to $5.9 billion at December 31, 2025.

Previous wording

Net interest margin (tax equivalent), defined as net interest income divided by average interest-earning assets, was 3.79% for the six months ended June 30, 2026, up from 3.66% for the same period in 2025. This increase was primarily due to an increase in earning asset yields and decreased funding costs.

Current wording

Net interest margin (tax equivalent), defined as net interest income divided by average interest-earning assets, was 3.78% for the nine months ended September 30, 2026, up from 3.71% for the same period in 2025. This increase was primarily due to an increase in investment security and loan yields and decreased interest bearing deposit costs.

Previous wording

Net interest income before the provision for credit losses was $150.4 million compared to net interest income of $123.3 million for the same period in 2025. The increase in net interest income was primarily due to the addition of the Two Rivers Bank loan portfolio, as well as the increased net interest margin as mentioned above.

Current wording

Net interest income before the provision for credit losses was $229.8 million compared to net interest income of $189.6 million for the same period in 2025. The increase in net interest income was primarily due to the addition of the Two Rivers Bank loan portfolio, as well as the increased net interest margin as mentioned above.

Previous wording

Total non-interest income of $55.3 million increased $6.8 million or 14.1% from $48.5 million for the same period last year. The increase in non-interest income resulted primarily from the addition of Two Rivers Bank, an increase in insurance commissions, and an increase in wealth management revenues.

Current wording

Total non-interest income of $82.5 million increased $11.1 million or 15.58% from $71.4 million for the same period last year. The increase in non-interest income resulted primarily from the addition of Two Rivers Bank, an increase in insurance commissions, and an increase in wealth management revenues.

Previous wording

Total non-interest expense of $131.4 million increased $22.1 million or 20.2% from $109.2 million for the same period last year. The increase was primarily due to increases in salaries, employee benefits, net occupancy, equipment expenses, and integration expenses due to the acquisition of Two Rivers in the first quarter of 2026.

Current wording

Total non-interest expense of $196.3 million increased $29.9 million or 17.99% from $166.4 million for the same period last year. The increase was primarily due to increases in salaries, employee benefits, occupancy and equipment expenses, and integration expenses due to the acquisition of Two Rivers in the first quarter of 2026 and the subsequent merger of Two Rivers Bank into First Mid Bank in the second quarter of 2026.

Previous wording

Credit quality is an area of importance to the Company. Total nonperforming loans were $41.3 million at June 30, 2026, compared to $21.9 million at June 30, 2025 and $31.9 million at December 31, 2025. See the discussion under the heading “Loan Quality and Allowance for Credit Losses” for a detailed explanation of these balances. Repossessed asset balances totaled $5.8 million at June 30, 2026 compared to $1.7 million at June 30, 2025 and $2.9 million at December 31, 2025.

Current wording

Credit quality is an area of importance to the Company. Total nonperforming loans were $43.1 million at September 30, 2026, compared to $22.2 million at September 30, 2025 and $31.9 million at December 31, 2025. See the discussion under the heading “Loan Quality and Allowance for Credit Losses” for a detailed explanation of these balances. Repossessed asset balances totaled $5.0 million at September 30, 2026 compared to $1.5 million at September 30, 2025 and $2.9 million at December 31, 2025.

Previous wording

The Company’s provision for credit losses for the six months ended June 30, 2026 and 2025 was $4.1 million and $4.2 million, respectively. The decrease in provision expense was a result of a decrease in net charge-offs partially offset by an increase in gross loan balances.

Current wording

The Company’s provision for credit losses for the nine months ended September 30, 2026 and 2025 was $3.8 million and $7.6 million, respectively. The decrease in provision expense was a result of a decrease in net charge-offs and a decrease in organic loan growth in 2026 compared to the same period in 2025.

Previous wording

The Company’s capital position remains strong, and the Company has consistently maintained regulatory capital ratios above the “well-capitalized” standards. The Company’s Tier 1 capital to risk weighted assets ratio at June 30, 2026 and 2025 and December 31, 2025 was 13.87%, 13.31% and 13.55%, respectively. The Company’s total capital to risk weighted assets ratio at June 30, 2026 and 2025, and December 31, 2025 was 15.41%, 15.76% and 15.67%, respectively.

Current wording

The Company’s capital position remains strong, and the Company has consistently maintained regulatory capital ratios above the “well-capitalized” standards. The Company’s Tier 1 capital to risk weighted assets ratio at September 30, 2026 and 2025 and December 31, 2025 was 14.39%, 13.53% and 13.55%, respectively. The Company’s total capital to risk weighted assets ratio at September 30, 2026 and 2025, and December 31, 2025 was 15.79%, 15.99% and 15.67%, respectively.

Previous wording

The Company enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include lines of credit, letters of credit and other commitments to extend credit. The total outstanding commitments at June 30, 2026 and 2025, were $1.6 billion and $1.4 billion, respectively. See Note 12 - “Commitments and Contingent Liabilities” herein for further information.

Current wording

The Company enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include lines of credit, letters of credit and other commitments to extend credit. The total outstanding commitments at September 30, 2026 and 2025, were $1.6 billion and $1.5 billion, respectively. See Note 12 - “Commitments and Contingent Liabilities” herein for further information.

Previous wording

For analytical purposes, net interest income is presented on a full tax equivalent (TE) basis in the table that follows. The federal statutory rate in effect of 21% for 2026 and 2025 was used. The TE analysis portrays the income tax benefits associated with the tax-exempt assets. The year-to-date net yield on interest-earning assets excluding the TE adjustments of $1.6 million and $1.5 million for 2026 and 2025, respectively, were 3.75% and 3.62% at June 30, 2026 and 2025, respectively.

Current wording

For analytical purposes, net interest income is presented on a full tax equivalent (TE) basis in the table that follows. The federal statutory rate in effect of 21% for 2026 and 2025 was used. The TE analysis portrays the income tax benefits associated with the tax-exempt assets. The year-to-date net yield on interest-earning assets excluding the TE adjustments of $2.4 million and $2.3 million for 2026 and 2025, respectively, were 3.74% and 3.66% at September 30, 2026 and 2025, respectively.

Previous wording

The Company’s average balances, fully tax equivalent interest income and interest expense, and rates earned or paid for major balance sheet categories are set forth for the three and six months ended June 30, 2026 and 2025 in the following table (dollars in thousands):

Current wording

The Company’s average balances, fully tax equivalent interest income and interest expense, and rates earned or paid for major balance sheet categories are set forth for the three and nine months ended September 30, 2026 and 2025 in the following table (dollars in thousands):

Previous wording

Changes in net interest income may also be analyzed by segregating the volume and rate components of interest income and interest expense. The following table summarizes the approximate relative contribution of changes in average volume and interest rates to changes in net interest income for the three and six months ended June 30, 2026 and 2025, compared to the same period in 2025 (in thousands):

Current wording

Changes in net interest income may also be analyzed by segregating the volume and rate components of interest income and interest expense. The following table summarizes the approximate relative contribution of changes in average volume and interest rates to changes in net interest income for the three and nine months ended September 30, 2026, compared to the same periods in 2025 (in thousands):

Previous wording

Net interest income on a tax equivalent basis increased $27.2 million, or 21.83%, to $152.0 million for the six months ended June 30, 2026, from $124.8 million for the same period in 2025. Net interest income on a tax equivalent basis and tax equivalent net interest margin increased primarily due to an increase in earning asset yields and a decrease in the cost of funding.

Current wording

Net interest income on a tax equivalent basis increased $40.3 million, or 21.01%, to $232.3 million for the nine months ended September 30, 2026, from $191.9 million for the same period in 2025. Net interest income on a tax equivalent basis and tax equivalent net interest margin increased primarily due to an increase in investment security and loan yields and a decrease in interest bearing deposit costs.

Previous wording

For the six months ended June 30, 2026, average earning assets increased $1.2 billion, or 17.79%, and average interest-bearing liabilities increased $1.0 billion or 19.58% compared with average balances for the same period in 2025.

Current wording

For the nine months ended September 30, 2026, average earning assets increased $1.3 billion, or 18.80%, and average interest-bearing liabilities increased $1.0 billion or 18.77% compared with average balances for the same period in 2025.

Previous wording

The provision for credit losses for the six months ended June 30, 2026 and 2025 was $4.1 million and $4.2 million, respectively. Nonperforming loans were $41.3 million and $21.9 million as of June 30, 2026 and 2025, respectively. Net charge offs were $2.9 million for the six months ended June 30, 2026, compared to net charge offs of $3.2 million for June 30, 2025. For information on credit loss experience and nonperforming loans, see “Nonperforming Loans and Nonperforming Other Assets” and “Loan Quality and Allowance for Credit Losses” herein.

Current wording

The provision for credit losses for the nine months ended September 30, 2026 and 2025 was $3.8 million and $7.6 million, respectively. Nonperforming loans were $43.1 million and $22.2 million as of September 30, 2026 and 2025, respectively. Net charge offs were $3.1 million for the nine months ended September 30, 2026, compared to net charge offs of $4.8 million for the nine months ended September 30, 2025. For information on credit loss experience and nonperforming loans, see “Nonperforming Loans and Nonperforming Other Assets” and “Loan Quality and Allowance for Credit Losses” herein.

Previous wording

An important source of the Company’s revenue is derived from other income. The following table sets forth the major components of other income for the three and six months ended June 30, 2026 and 2025 (in thousands):

Current wording

An important source of the Company’s revenue is derived from other income. The following table sets forth the major components of other income for the three and nine months ended September 30, 2026 and 2025 (in thousands):

Previous wording

The primary reasons for the more significant changes in other income components for the three and six months ended June 30, 2026 compared to the same period in 2025 are as follows:

Current wording

The primary reasons for the more significant changes in other income components for the three and nine months ended September 30, 2026 compared to the same period in 2025 are as follows:

Previous wording

Wealth management revenues increased for the three and six month periods due to the acquisition of Two Rivers on February 28, 2026, including their trust and brokerage portfolio, the acquisition of RFMS in December of 2025, and organic growth.

Current wording

Wealth management revenues increased for the three and nine month periods due to the acquisition of Two Rivers on February 28, 2026, including their trust and brokerage portfolio, the acquisition of RFMS in December of 2025, and organic growth.

Previous wording

Insurance commissions increased for the three and six month periods primarily due to the acquisition of a portion of AAIG's customer list in July 2025 and the customer list of DIA in January 2026 as well as organic growth.

Current wording

Insurance commissions increased for the three and nine month periods primarily due to the acquisition of the customer list of DIA in January 2026 as well as organic growth.

Previous wording

The major categories of other expense include salaries and employee benefits, occupancy and equipment expenses and other operating expenses associated with day-to-day operations. The following table sets forth the major components of other expense for the three and six months ended June 30, 2026 and 2025 (dollars in thousands):

Current wording

The major categories of other expense include salaries and employee benefits, occupancy and equipment expenses and other operating expenses associated with day-to-day operations. The following table sets forth the major components of other expense for the three and nine months ended September 30, 2026 and 2025 (dollars in thousands):

Previous wording

The primary reasons for the more significant changes in other expense components for the three and six months ended June 30, 2026 compared to the same period in 2025 are as follows:

Current wording

The primary reasons for the more significant changes in other expense components for the three and nine months ended September 30, 2026 compared to the same period in 2025 are as follows:

Previous wording

The increase for the three and six month periods in salaries and employee benefits, the largest component of other expense, is primarily due to the increase in full-time equivalent employees from 1,190 to 1,316 at June 30, 2025 and 2026, respectively, due to the acquisition of Two Rivers and the Company's annual merit and promotional cycle that occurs in April.

Current wording

The increase for the three and nine month periods in salaries and employee benefits, the largest component of other expense, is primarily due to the increase in full-time equivalent employees from 1,178 to 1,313 at September 30, 2025 and 2026, respectively, due to the acquisition of Two Rivers and the Company's annual merit and promotional cycle that occurs in April.

Previous wording

The increase for the three and six month periods in occupancy and equipment expense is primarily due to the acquisition of Two Rivers and the related expanded real estate footprint and increase in full-time equivalent employees.

Current wording

The increase for the three and nine month periods in occupancy and equipment expense is primarily due to the acquisition of Two Rivers and the related expanded real estate footprint and increase in full-time equivalent employees.

Previous wording

The increase for the three and six month periods in ATM / debit card expense is primarily due to the acquisition of Two Rivers and the related increase in the volume of transactions.

Current wording

The increase for the nine month period in ATM / debit card expense is primarily due to the acquisition of Two Rivers and the related increase in the volume of transactions.

Previous wording

The increase for the three and six month periods in all other operating expenses is primarily due to integration and acquisition expenses related to the acquisition of Two Rivers Bank on February 28, 2026.

Current wording

The increase for the nine month period in all other operating expenses is primarily due to integration and acquisition expenses related to the acquisition of Two Rivers Bank on February 28, 2026.

Previous wording

Total income tax expense amounted to $16.1 million for the six months ended June 30, 2026, compared to $12.7 million for the same period in 2025. Effective tax rates were 22.9% for the six months ended June 30, 2026, compared to 21.7% for the same period in 2025. The Company files U.S. federal and state of Florida, Illinois, Indiana, Iowa, Missouri, Texas, and Wisconsin income tax returns.

Current wording

Total income tax expense amounted to $24.7 million for the nine months ended September 30, 2026, compared to $19.0 million for the same period in 2025. Effective tax rates were 22.06% for the nine months ended September 30, 2026, compared to 21.80% for the same period in 2025. The Company files U.S. federal and state of Florida, Illinois, Indiana, Iowa, Missouri, Texas, and Wisconsin income tax returns.

Previous wording

At June 30, 2026, the amortized cost of the Company’s investment portfolio increased by $208.2 million from December 31, 2025 primarily due to the acquisition of Two Rivers Bank, subsequent sale of their entire portfolio, reinvestment of a portion of the proceeds, and the redeployment of some of the proceeds to other areas of the balance sheet. When purchasing investment securities, the Company considers its overall liquidity and interest rate risk profile, as well as the adequacy of expected returns relative to the risks assumed.

Current wording

At September 30, 2026, the amortized cost of the Company’s investment portfolio increased by $301.6 million from December 31, 2025 primarily due to the acquisition of Two Rivers Bank, subsequent sale of their entire portfolio, reinvestment of a portion of the proceeds, and the redeployment of some of the proceeds to other areas of the balance sheet. When purchasing investment securities, the Company considers its overall liquidity and interest rate risk profile, as well as the adequacy of expected returns relative to the risks assumed.

Previous wording

The weighted average yields are calculated on the basis of the amortized cost and effective yields weighted for the scheduled maturity of each security. Tax equivalent yields have been calculated using a 21% tax rate. With the exception of obligations of the U.S. Treasury and other U.S. government agencies and corporations, there were no investment securities of any single issuer, which the book value exceeded 10% of stockholders' equity at June 30, 2026.

Current wording

The weighted average yields are calculated on the basis of the amortized cost and effective yields weighted for the scheduled maturity of each security. Tax equivalent yields have been calculated using a 21% tax rate. With the exception of obligations of the U.S. Treasury and other U.S. government agencies and corporations, there were no investment securities of any single issuer for which the book value exceeded 10% of stockholders' equity at September 30, 2026.

Previous wording

Loan balances increased $923.0 million, or 15.4%. The increase was primarily due to the acquisition of Two Rivers. The balance of real estate loans held for sale, included in the balances shown above, amounted to $6.7 million and $5.2 million as of June 30, 2026 and December 31, 2025, respectively.

Current wording

Loan balances increased $837.2 million, or 13.93%. The increase was primarily due to the acquisition of Two Rivers. The balance of real estate loans held for sale, included in the balances shown above, amounted to $6.8 million and $5.2 million as of September 30, 2026 and December 31, 2025, respectively.

Previous wording

As of June 30, 2026, loans with maturities over one year consisted of approximately $3.0 billion in fixed rate loans and approximately $2.3 billion in variable rate loans. The loan maturities noted above are based on the contractual provisions of the individual loans. The Company has no general policy regarding renewals and borrower requests, which are handled on a case-by-case basis.

Current wording

As of September 30, 2026, loans with maturities over one year consisted of approximately $2.9 billion in fixed rate loans and approximately $2.3 billion in variable rate loans. The loan maturities noted above are based on the contractual provisions of the individual loans. The Company has no general policy regarding renewals and borrower requests, which are handled on a case-by-case basis.

Previous wording

The $9.4 million increase in nonaccrual loans during 2026 resulted from the net of $10.9 million of loans acquired from Two Rivers Bank, $4.8 million of loans put on nonaccrual status, offset by $2.4 million of loans becoming current or paid-off, $2.4 million of loans transferred to other real estate owned, and $1.5 million of loans charged off.

Current wording

The $10.5 million increase in nonaccrual loans during 2026 resulted from the net of $11.0 million of loans acquired from Two Rivers Bank, $8.0 million of loans put on nonaccrual status, offset by $2.1 million of loans becoming current or paid-off, $2.5 million of loans transferred to other real estate owned, and $3.9 million of loans charged off.

Previous wording

Interest income that would have been reported if nonaccrual and restructured loans had been performing totaled $1.8 million and $662,000 for the six months ended June 30, 2026 and 2025, respectively.

Current wording

Interest income that would have been reported if nonaccrual and restructured loans had been performing totaled $2.8 million and $981,000 for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

The $2.9 million increase in repossessed assets during 2026 resulted from $3.4 million of additional assets repossessed and $354,000 of repossessed assets sold, $100,000 of write-downs on existing assets, and $0 deferred fair value marks were recognized. The following table summarizes the composition of repossessed assets (dollars in thousands):

Current wording

The $2.2 million increase in repossessed assets during 2026 resulted from $3.4 million of additional assets repossessed and $551,000 of repossessed assets sold, $608,000 of write-downs on existing assets, and no deferred fair value marks were recognized. The following table summarizes the composition of repossessed assets (dollars in thousands):

Previous wording

Repossessed assets sold during the first six months of 2026 resulted in net gains of $1,000 related to real estate asset sales and no net losses related to other assets sales.

Current wording

Repossessed assets sold during the first nine months of 2026 resulted in net gains of $10,000 related to real estate asset sales and no net gains / losses related to other assets sales.

Previous wording

Management recognizes there are risk factors that are inherent in the Company’s loan portfolio. All financial institutions face risk factors in their loan portfolios because risk exposure is a function of the business. A portion of the Company’s operations (and therefore its loans) are concentrated in Illinois, where agriculture is the dominant industry. Accordingly, lending and other business relationships with agriculture-based businesses are critical to the Company’s success. At June 30, 2026, the Company’s loan portfolio included $783.0 million of loans to borrowers whose businesses are directly related to agriculture. Of this amount, $656.5 million was concentrated in other grain farming. Total loans to borrowers whose businesses are directly related to agriculture increased $101.6 million from $681.4 million at December 31, 2025 while loans concentrated in other grain farming increased $78.6 million from $577.9 million at December 31, 2025. While the Company adheres to sound underwriting practices, including collateralization of loans, any extended period of low commodity prices, drought conditions, significantly reduced yields on crops and/or reduced levels of government assistance to the agricultural industry could result in an increase in the level of problem agriculture loans and potentially result in credit losses within the agricultural portfolio. The Company also has $1.3 billion loans to lessors of non-residential buildings and $717.4 million of loans to lessors of residential buildings and dwellings.

Current wording

Management recognizes there are risk factors that are inherent in the Company’s loan portfolio. All financial institutions face risk factors in their loan portfolios because risk exposure is a function of the business. A portion of the Company’s operations (and therefore its loans) are concentrated in Illinois, where agriculture is the dominant industry. Accordingly, lending and other business relationships with agriculture-based businesses are critical to the Company’s success. At September 30, 2026, the Company’s loan portfolio included $794.4 million of loans to borrowers whose businesses are directly related to agriculture. Of this amount, $670.3 million was concentrated in other grain farming. Total loans to borrowers whose businesses are directly related to agriculture increased $113.0 million from $681.4 million at December 31, 2025 while loans concentrated in other grain farming increased $92.4 million from $577.9 million at December 31, 2025. While the Company adheres to sound underwriting practices, including collateralization of loans, any extended period of low commodity prices, drought conditions, significantly reduced yields on crops and/or reduced levels of government assistance to the agricultural industry could result in an increase in the level of problem agriculture loans and potentially result in credit losses within the agricultural portfolio. The Company also has $1.2 billion loans to lessors of non-residential buildings and $744.6 million of loans to lessors of residential buildings and dwellings.

Previous wording

Analysis of the allowance for credit losses as of June 30, 2026 and 2025, and of changes in the allowance for the three and six months ended June 30, 2026 and 2025, is summarized as follows (dollars in thousands):

Current wording

Analysis of the allowance for credit losses as of September 30, 2026 and 2025, and of changes in the allowance for the three and nine months ended September 30, 2026 and 2025, is summarized as follows (dollars in thousands):

Previous wording

During the first six months of 2026, the Company had net charge offs of $2.9 million compared to net charge offs of $3.2 million during the same period of 2025. During the first six months of 2026, the Company had the following significant charge offs, two commercial real estate loans to one borrower totaling $1.1 million, one commercial loan to one borrower totaling $290,000, and ten agricultural loans to nine borrowers totaling $1.8 million. During the first six months of 2025, the Company had the following significant charge offs, one commercial real estate loan to one borrower totaling $338,000, nine agricultural loans to eight borrowers totaling $1.8 million, and three commercial operating loans to three borrowers totaling $620,000.

Current wording

During the first nine months of 2026, the Company had net charge offs of $3.1 million compared to net charge offs of $4.8 million during the same period of 2025. During the first nine months of 2026, the Company had the following significant charge offs, three commercial real estate loans to two borrowers totaling $1.2 million, one commercial loan to one borrower totaling $290,000, and ten agricultural loans to nine borrowers totaling $1.8 million. During the first nine months of 2025, the Company had the following significant charge offs, two commercial real estate loans to two borrowers totaling $1.0 million, nine agricultural loans to eight borrowers totaling $1.8 million, seven commercial operating loans to six borrowers totaling $1.5 million, and one construction and land development loan to one borrower totaling $107,000.