Capital Bancorp Inc
For the period ended Sep 30, 2026. Filed Nov 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 6, 2026
CBNK$42.39-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-07.
0001419536-26-000112
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-06.
0001419536-26-000186
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 220 previous paragraphs and 235 current paragraphs.
153 unchanged; 60 reworded; 21 added; 4 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 37 previous and 37 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
•the possibility that the company’s pending merger with Peoples Bancorp, Inc. (“Peoples”) does not close when expected or at all because required regulatory or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all, and the possibility that such approvals may impose conditions that could adversely affect the combined company or the anticipated benefits of the merger;
Current report
•the possibility that the anticipated benefits and cost savings from the merger with Peoples may not be fully realized or may take longer to realize than expected;
Current report
•disruptions to the Company’s business as a result of the announcement and pendency of the merger with Peoples;
Current report
•the possibility that the merger with Peoples may be more expensive to complete than anticipated, including as a result of unexpected factors or events;
Current report
•risks related to the development and use of artificial intelligence (“AI”) by us, our vendors, and other third parties, including evolving legal and regulatory requirements;
Current report
•our ability to maintain effective internal control over financial reporting depends in part on the continued successful implementation and operation of enhanced controls in loan operations.
Current report
Pending Merger with Peoples
Current report
On September 29, 2026, the Company and Peoples, the parent company of Peoples Bank, entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides that, upon the terms and subject to conditions set therein, Capital will merge with and into Peoples (the “Merger”), with Peoples continuing as the surviving corporation in the Merger. Immediately following the Merger, or at such later time as Peoples may determine, Peoples will cause Capital Bank to merge with and into Peoples Bank (the “Bank Merger”), with Peoples Bank continuing as the surviving bank in the
Current report
Bank Merger. The Merger Agreement has been unanimously approved by the boards of directors of Peoples and Capital.
Current report
At the effective time of the Merger (the “Effective Time”), each outstanding share of the Company’s common stock, other than shares excluded under the Merger Agreement, will be converted into the right to receive 1.11 shares of Peoples’ common stock, with cash paid in lieu of fractional shares. The Merger is expected to close in the first half of 2027, subject to satisfaction of customary closing conditions, including regulatory approvals and the approvals of stockholders of Peoples and the Company.
Current report
Chicago Branch Sale
Current report
On September 29, 2026, Capital Bank entered into a purchase and assumption agreement (the “P&A Agreement”) with respect to the Bank’s branch office located at North Riverside, Illinois. Pursuant to the P&A Agreement, another financial institution will purchase the branch office as well as certain loans and other assets attributed to the branch office and will also assume certain deposit and other liabilities attributed to the branch office (the “Chicago Branch Sale”). Consummation of the Chicago Branch Sale is subject to customary closing conditions, including the receipt of all required regulatory approvals and is expected to close during the first quarter of 2027.
Current report
(2)Balances include held for sale transactions in connection with the Chicago Branch Sale.
Current report
(3) Average balances include nonaccrual loans. As of September 30, 2026, nonaccrual loans of $0.3 million were included in Loans held for sale and $56.4 million were in Portfolio loans receivable.
Current report
(2)Balances include held for sale transactions in connection with the Chicago Branch Sale.
Current report
(3) Average balances include nonaccrual loans. As of September 30, 2026, nonaccrual loans of $0.3 million were included in Loans held for sale and $56.4 million were in Portfolio loans receivable.
Current report
For the three months ended September 30, 2026, the provision for credit losses was $4.9 million, an increase of $0.3 million from the same period in 2025. The increased provision for credit losses was primarily driven by $0.8 million of increases for OpenSky™ loans, slightly offset by $0.5 million of decreases for the Commercial Bank portfolio. The provision from OpenSky™ increased $0.8 million, primarily driven by higher volumes in the unsecured portfolio - as unsecured card balances increased $18.0 million from $39.6 million at September 30, 2025 to $57.6 million. Additionally, net charge-offs for the unsecured portfolio increased $1.0 million compared to the three months ended September 30, 2025.
Current report
Government lending revenue of $1.5 million for the three months ended September 30, 2026 increased $1.5 million as compared to the three months ended September 30, 2025, primarily as a result of increased activity from USDA gain on sale.
Current report
(1)Ratios as of September 30, 2026 exclude $0.3 million balance for one held for sale loan that was classified as nonaccrual.
Current report
We have contractual obligations to make future payments on debt and lease agreements. Our liquidity monitoring and management consider both present and future demands for and sources of liquidity. During the three and nine months ended September 30, 2026 the Company retired $50.0 million in FHLB advances and commenced a new 45-month lease agreement in Annapolis, Maryland. The company also commenced a 64-month lease for loan production office use in Towson, Maryland on October 5, 2026, as disclosed in Note 8 - Leases.
Current report
On September 29, 2026, the Company entered into a definitive Merger Agreement in connection with the pending acquisition of the Company. Certain provisions of the Merger Agreement, including termination-related provisions, are contingent in nature and do not represent material contractual obligations of the Company as of September 30, 2026. Additional information regarding the merger agreement is included in Note 2 - Pending Merger Agreement.
Removed paragraphs (4)
Previous report
(2)Portfolio loans receivable balance includes nonaccrual loans.
Previous report
(2)Portfolio loans receivable balance includes nonaccrual loans.
Previous report
For the three months ended June 30, 2026, the provision for credit losses was $3.6 million, a decrease of $0.5 million from the same period in 2025. The decreased provision for credit losses was primarily driven by decreases of $3.2 million for C&I loans, offset by increases of $1.4 million for commercial real estate loans and $1.1 million of increases for OpenSky™ loans. The $3.2 million decrease in provision for C&I loans was driven by decreases of $3.4 million in the specific reserve for two individually analyzed loans during the three months ended June 30, 2026. For commercial real estate loans in the three months ended June 30, 2025 there was a loan sale that resulted in the removal of a $2.9 million specific reserve from the allowance, thereby decreasing the amount of provision required, offset by $1.7 million in additional charge-offs, increasing the amount of provision required. This resulted in a negative provision of $1.3 million for commercial real estate loans during the three months ended June 30, 2025. There were no charge-offs or significant fluctuations in the required reserve for commercial real estate loans during the three months ended June 30, 2026. Therefore, the provision required for the quarter was approximately $0.1 million, a $1.4 million increase from the same period in 2025. The provision from OpenSky™ increased $1.1 million, primarily driven by higher volumes in the unsecured portfolio - as unsecured card balances increased $18.5 million from $32.7 million at June 30, 2025 to $51.2 million. Additionally, net charge-offs for OpenSky™ increased $0.9 million compared to the three months ended June 30, 2025.
Previous report
Government lending revenue of $1.2 million for the three months ended June 30, 2026 decreased $1.9 million as compared to the three months ended June 30, 2025, primarily as a result of significant budget cuts within the USDA and changes to investment tax credits for commercial solar loans that began to take effect in 2025 and resulted in decreased volumes for government guaranteed loans. However, the reduced volume was slightly offset by continued increases in SBA loan sales.
Reworded paragraphs (60)
Previous wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended as a review of significant factors affecting the Company’s financial condition and results of operations for the periods indicated. This discussion and analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and the related notes and the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The results for the three and six months ended June 30, 2026 are not necessarily indicative of the results expected for the year ending December 31, 2026.
Current wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended as a review of significant factors affecting the Company’s financial condition and results of operations for the periods indicated. This discussion and analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and the related notes and the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results expected for the year ending December 31, 2026.
Previous wording
•our dependence on our information technology and telecommunications systems, including third party vendors, and the potential for any data privacy incidents or other systems failures, interruptions, or security breaches and risks related to the development and use of artificial intelligence (“AI”);
Current wording
•our dependence on our information technology and telecommunications systems, including third party vendors, and the potential for cyberattacks, data privacy incidents or other security breaches, systems failures, or interruptions, any of which could result in financial losses, reputational harm, litigation or regulatory action;
Previous wording
As you read and consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions and can change as a result of many possible events or factors, not all of which are known to us or in our control. Although we believe that these forward-looking statements are based on reasonable assumptions, beliefs and expectations, if a change occurs or our beliefs, assumptions or expectations were incorrect, our business, financial condition, liquidity and/or results of operations may vary materially from those expressed in our forward-looking statements. You should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include those described under the heading “Risk Factors” under Item 1A. in our Annual Report on Form 10-K for the year ended December 31, 2025 and those referenced herein and in other reports on file with the Securities and Exchange Commission (“SEC”).
Current wording
As you read and consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions and can change as a result of many possible events or factors, not all of which are known to us or in our control. Although we believe that these forward-looking statements are based on reasonable assumptions, beliefs and expectations, if a change occurs or our beliefs, assumptions or expectations were incorrect, our business, financial condition, liquidity and/or results of operations may vary materially from those expressed in our forward-looking statements. You should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include those described under the heading “Risk Factors” under Item 1A. in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”) and those referenced herein and in other reports on file with the Securities and Exchange Commission (“SEC”).
Previous wording
The Company’s critical accounting policies and reporting estimates are fundamental to understanding the Company’s consolidated financial position and consolidated results of operations. Accordingly, the Company’s significant accounting policies are discussed in detail in Note 1 “Nature of Business and Basis of Presentation” in the “Notes to the Consolidated Financial Statements” contained in Part II. Item 8 "Financial Statements and Supplementary Data" of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Current wording
The Company’s critical accounting policies and reporting estimates are fundamental to understanding the Company’s consolidated financial position and consolidated results of operations. Accordingly, the Company’s significant accounting policies are discussed in detail in Note 1 - ''Nature of Business and Basis of Presentation'' in the “Notes to the Consolidated Financial Statements” contained in Part II. Item 8 "Financial Statements and Supplementary Data" of the 2025 Form 10-K .
Previous wording
OpenSky™, Windsor Advantage™, and Capital Bank Home Loans (“CBHL”). In determining the appropriateness of segment definition, the Company considers components of the business about which financial information is available and regularly evaluated relative to resource allocation and performance assessment. The accompanying consolidated financial statements have been prepared in accordance with GAAP and conform to general practices within the banking industry.
Current wording
The Company currently operates four divisions and reporting segments: Commercial Banking, OpenSky™, Windsor Advantage™, and Capital Bank Home Loans (“CBHL”). In determining the appropriateness of segment definition, the Company considers components of the business about which financial information is available and regularly evaluated relative to resource allocation and performance assessment. The accompanying consolidated financial statements have been prepared in accordance with GAAP and conform to general practices within the banking industry.
Previous wording
Net income for the three months ended June 30, 2026 was $14.3 million, compared to net income of $13.1 million for the same period in 2025, an 8.5% increase. There were no non-GAAP adjustments to net income of $14.3 million for three months ended June 30, 2026, a $44 thousand increase from net income, as adjusted (non-GAAP) of $14.2 million for the three months ended June 30, 2025. For more information on the computation of non-GAAP financial measures, see “Non-GAAP Financial Measures and Reconciliations.”
Current wording
Net income for the three months ended September 30, 2026 was $13.1 million, compared to net income of $15.1 million for the same period in 2025, a 12.9% decrease. Net income, as adjusted (non-GAAP) to exclude the impact of $1.6 million of after-tax merger-related expenses was $14.7 million for the three months ended September 30, 2026. Net income, as adjusted (non-GAAP) to exclude the impact of $0.6 million of after-tax merger-related expenses relating to the IFH acquisition and $3.5 million for the Call of Brokered Time Deposits acquired from the IFH transaction (“Call of Brokered Time Deposits”) was $12.2 million for the three months ended September 30, 2025. For more information on the computation of non-GAAP financial measures, see “Non-GAAP Financial Measures and Reconciliations.”
Previous wording
Net interest income increased by $3.3 million, or 6.9%, to $50.9 million when comparing the three months ended June 30, 2026 to the three months ended June 30, 2025, primarily driven by increased interest income of $3.8 million from the Commercial Bank due to organic loan growth, and $1.5 million from OpenSky™ due to growth from the unsecured loan product offset by $2.1 million of increased interest expense. The $2.1 million increased interest expense was driven by $1.0 million from higher balances and a shift in deposit mix, $0.8 million of lower PAA, and $0.3 million of higher borrowing costs.
Current wording
Net interest income increased by $1.1 million, or 2.0%, to $53.1 million when comparing the three months ended September 30, 2026 to the three months ended September 30, 2025, primarily driven by increased interest income of $6.5 million from the Commercial Bank due to organic loan growth, and $0.9 million from OpenSky™ due to growth from the unsecured loan product, offset by $6.3 million of increased interest expense. The $6.3 million increased interest expense was driven by $1.0 million from higher deposit balances and a shift in deposit mix, $5.2 million of decreased benefit from purchase accounting accretion (“PAA”), and $0.1 million of higher borrowing costs.
Previous wording
The provision for credit losses for the three months ended June 30, 2026 was $3.6 million, a decrease of $0.5 million from the same period in 2025. Net charge-offs for the three months ended June 30, 2026 were $3.8 million, or 0.50% on an annualized basis of average portfolio loans, compared to $5.1 million, or 0.75% on an annualized basis of average portfolio loans for the same period in 2025.
Current wording
The provision for credit losses for the three months ended September 30, 2026 was $4.9 million, an increase of $0.3 million from the same period in 2025. Net charge-offs for the three months ended September 30, 2026 were $3.8 million, or 0.49% on an annualized basis of average portfolio loans, compared to $2.5 million, or 0.35% on an annualized basis of average portfolio loans for the same period in 2025.
Previous wording
For the three months ended June 30, 2026, noninterest income of $14.4 million increased $1.3 million, or 9.6%, from the same period in 2025, driven by a $1.7 million increase from government loan servicing and packaging revenue and $0.9 million from loan servicing rights, and a $0.2 million increase in mortgage banking revenue, offset by a $1.9 million decrease in government lending revenue.
Current wording
For the three months ended September 30, 2026, noninterest income of $15.0 million increased $4.0 million, or 35.9%, from the same period in 2025, driven by a $1.5 million increase in government lending revenue mostly from USDA gain on sale, $1.2 million from SBIC income, $0.8 million increase from government loan servicing and packaging revenue (Windsor TM) driven by growth in servicing income from organic growth in the servicing portfolio, and $0.3 million of fees earned from USDA deals which were not executed.
Previous wording
Noninterest expense was $43.2 million for the three months ended June 30, 2026, an increase of $3.6 million from the same period in 2025. The change was primarily driven by increases in professional fees of $1.7 million, salaries and employee benefits expenses of $1.6 million, occupancy and equipment expenses of $0.9 million, loan processing expenses of $0.5 million, and advertising expenses of $0.4 million, offset by decreases in merger-related expenses of $1.4 million and operating losses of $0.2 million.
Current wording
Noninterest expense was $45.7 million for the three months ended September 30, 2026, an increase of $7.4 million from the same period in 2025. The change was primarily driven by increases in salaries and employee benefits expenses of $3.4 million driven by planned expansion and investment in headcount across the organization, increases of $2.8 million in professional fees associated with investments in shared services areas and OpenSky TM, occupancy and equipment expenses of $1.3 million, merger-related expenses of $0.9 million, and regulatory assessment expenses of $0.2 million, offset by decreases in loan processing expenses of $0.6 million, other operating expenses of $0.5 million, and advertising expenses of $0.1 million.
Previous wording
The table below presents the average balances and weighted average rates of the major categories of the Company’s assets, liabilities and stockholders’ equity for the three and six months ended June 30, 2026 and 2025. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived by utilizing average daily balances for the time periods shown. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yield/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.
Current wording
The table below presents the average balances and weighted average rates of the major categories of the Company’s assets, liabilities and stockholders’ equity for the three and nine months ended September 30, 2026 and 2025. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived by utilizing average daily balances for the time periods shown. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yield/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.
Previous wording
(3)For the three months ended June 30, 2026 and 2025, collectively, Core Loan Yield was 6.77% and 7.14%, respectively. See “Non-GAAP Financial Measures and Reconciliations” for a reconciliation of non-GAAP measures.
Current wording
(4) For the three months ended September 30, 2026 and 2025, collectively, Core Loan Yield was 6.83% and 6.74%, respectively. See “Non-GAAP Financial Measures and Reconciliations” for a reconciliation of non-GAAP measures.
Previous wording
(4)For the three months ended June 30, 2026 and 2025, collectively, Core Net Interest Margin was 4.04% and 4.42%, respectively. See “Non-GAAP Financial Measures and Reconciliations” for a reconciliation of non-GAAP measures.
Current wording
(5) For the three months ended September 30, 2026 and 2025, collectively, Core Net Interest Margin was 4.18% and 4.66%, respectively. See “Non-GAAP Financial Measures and Reconciliations” for a reconciliation of non-GAAP measures.
Previous wording
The net interest margin decreased 40 basis points to 5.64% for the three months ended June 30, 2026 from the same period in 2025. Core net interest margin (non-GAAP) decreased to 4.04% for the three months ended June 30, 2026, compared to 4.42% for the same period in 2025. For more information on the computation of non-GAAP financial measures, see “Non-GAAP Financial Measures and Reconciliations.”
Current wording
The net interest margin decreased 55 basis points to 5.81% for the three months ended September 30, 2026 from the same period in 2025. Core net interest margin (non-GAAP) decreased 48 bps to 4.18% for the three months ended September 30, 2026, compared to 4.66% for the same period in 2025. There was $4.6 million of PAA from the Call of Brokered Time Deposits during 3Q 2025, or 56 bps of NIM and 59 bps of Core NIM. Excluding the impact from the Call of Brokered Time Deposits, NIM increased 1 bp and Core NIM increased 11 bps year-over-year. For more information on the computation of non-GAAP financial measures, see “Non-GAAP Financial Measures and Reconciliations.”
Previous wording
For the three months ended June 30, 2026, average interest earning assets increased $456.5 million, or 14.4%, to $3.6 billion as compared to the same period in 2025, but the average yield on interest earning assets decreased to 7.75%, a 44 basis point decrease from 8.19% for the comparable 2025 period. The 44 basis point decrease was primarily due to changes in the rate environment, particularly impacting OpenSky™ products. Compared to the same period in the prior year, average interest-bearing liabilities increased $383.2 million, or 18.5%, and the average cost of interest-bearing liabilities decreased to 3.11%, a 17 basis point decrease from 3.28%, primarily as a result of a shift in the product mix of the portfolio as well as changes in the rate environment.
Current wording
For the three months ended September 30, 2026, average interest earning assets increased $378.4 million, or 11.7%, to $3.6 billion as compared to the same period in 2025, but the average yield on interest earning assets decreased to 7.91%, a 2 basis point decrease from 7.93% for the comparable 2025 period. The 2 basis point decrease was primarily due to changes in the rate environment. Compared to the same period in the prior year, average interest-bearing liabilities increased $328.2 million, or 15.4%, and the average cost of interest-bearing liabilities increased to 3.10%, a 70 basis point increase from 2.40%. The increase was primarily due to 86 bps from the Call of Brokered Time Deposits during the three months ended September 30, 2025. Excluding the Call of Brokered Time Deposits, the average cost of interest-bearing liabilities would have decreased 16 bps year-over-year, primarily driven by a shift in the product mix of the portfolio as well as changes in the rate environment.
Previous wording
(3)For the six months ended June 30, 2026 and 2025, collectively, Core Loan Yield was 6.85% and 7.14%, respectively. See “Non-GAAP Financial Measures and Reconciliations” for a reconciliation of non-GAAP measures.
Current wording
(4) For the nine months ended September 30, 2026 and 2025, collectively, Core Loan Yield was 6.84% and 7.01%, respectively. See “Non-GAAP Financial Measures and Reconciliations” for a reconciliation of non-GAAP measures.
Previous wording
(4)For the six months ended June 30, 2026 and 2025, collectively, Core Net Interest Margin was 4.09% and 4.39%, respectively. See “Non-GAAP Financial Measures and Reconciliations” for a reconciliation of non-GAAP measures.
Current wording
(5) For the nine months ended September 30, 2026 and 2025, collectively, Core Net Interest Margin was 4.12% and 4.48%, respectively. See “Non-GAAP Financial Measures and Reconciliations” for a reconciliation of non-GAAP measures.
Previous wording
When comparing the three months ended June 30, 2026 to the three months ended June 30, 2025, the largest positive impact to total interest income was the growth in interest earning assets due to organic growth. The loan portfolio, excluding credit card loans contributed $2.8 million of the $5.4 million increase in interest income, with growth (due to change in volume) accounting for a $5.2 million increase in interest income, offset by a $2.4 million decrease as a result of the rate environment. Growth in both secured and unsecured product drove an additional $1.8 million increase in volume for credit card loans. The $2.1 million increase in interest expense year over year was primarily driven by a $0.8 million lower benefit from net PAA, $1.0 million from a shift in deposit mix and $0.3 million of higher borrowing costs.
Current wording
When comparing the three months ended September 30, 2026 to the three months ended September 30, 2025, the largest positive impact to total interest income was the growth in interest earning assets due to organic growth. The loan portfolio, excluding credit card loans, contributed $6.3 million of the $7.4 million increase in interest income, with growth (due to change in volume) accounting for $5.7 million and increased yield as a result of a shift in product mix accounted for an additional $0.6 million of increased interest income. Growth in both secured and unsecured product drove an additional $1.7 million increase in volume for credit card loans. The $6.3 million increase in interest expense year over year was primarily driven by $5.2 million of decreased benefit from net PAA, $1.0 million from higher balances and a shift in deposit mix, and $0.1 million of higher borrowing costs.
Previous wording
When comparing the six months ended June 30, 2026 to the same period in 2025, the largest positive impact to total interest income was the growth in interest earning assets due to organic growth. The loan portfolio, excluding credit card loans contributed $7.6 million of the $10.6 million increase in interest income, with growth (due to change in volume) accounting for an $11.3 million increase in interest income, slightly offset by a $3.7 million decrease as a result of the rate environment. Growth in both secured and unsecured product drove an additional $3.5 million increase in volume for credit card loans. The $3.9 million increase in interest expense year over year was primarily driven by $1.6 million from a shift in deposit mix, $1.7 million lower benefit from PAA and $0.6 million of higher borrowing costs.
Current wording
When comparing the nine months ended September 30, 2026 to the same period in 2025, the largest positive impact to total interest income was the growth in interest earning assets due to organic growth. The loan portfolio, excluding credit card loans contributed $13.9 million of the $18.0 million increase in interest income, with growth (due to change in volume) accounting for a $17.1 million increase in interest income, slightly offset by a $3.2 million decrease as a result of the rate environment. Growth in both secured and unsecured product drove an additional $5.1 million increase in volume for credit card loans, slightly offset by a $1.7 million decrease as a result of the rate environment. The $10.3 million increase in interest expense year over year was primarily driven by $6.9 million lower benefit from PAA, $2.7 million shift in deposit mix, and $0.7 million of higher borrowing costs.
Previous wording
The provision for credit losses represents the amount of expense charged to current earnings to fund the ACL. For a description of the factors taken into account by our management in determining the ACL, see Note 1 “Nature of Business and Basis of Presentation” in the “Notes to the Consolidated Financial
Current wording
The provision for credit losses represents the amount of expense charged to current earnings to fund the ACL. For a description of the factors taken into account by our management in determining the ACL, see Note 1 - ''Nature of Business and Basis of Presentation'' in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of the 2025 Form 10-K.
Previous wording
The ACL as a percent of portfolio loans was 1.76% at June 30, 2026, as compared to 1.85% at December 31, 2025. The maintenance of a high-quality loan portfolio, with an adequate allowance for expected credit losses, will continue to be a primary objective for the Company. See additional discussion regarding the Company’s ACL and reserve for unfunded commitments credit exposures at June 30, 2026 in “Financial Condition - Allowance for Credit Losses.”
Current wording
The ACL as a percent of portfolio loans was 1.78% at September 30, 2026, as compared to 1.85% at December 31, 2025. The maintenance of a high-quality loan portfolio, with an adequate allowance for expected credit losses, will continue to be a primary objective for the Company. See additional discussion regarding the Company’s ACL and reserve for unfunded commitments credit exposures at September 30, 2026 in “Financial Condition - Allowance for Credit Losses.”
Previous wording
Our primary source of recurring noninterest income are credit card fees, such as interchange fees and statement fees, government guaranteed lending revenue (gain on sale), mortgage banking revenue and Windsor Advantage™ fee revenue in connection with its servicing, processing and packaging of SBA and USDA loans for its financial institution clients, and mortgage banking revenue. Noninterest income does not include (i) loan origination fees to the extent they exceed the direct loan origination costs, which are generally recognized over the life of the related loan as an adjustment to yield using the interest method or (ii) annual, renewal and late fees related to our credit card portfolio, which are generally deferred and recognized over the corresponding twelve-month cardholder service period as an adjustment to yield using the interest method.
Current wording
Our primary sources of recurring noninterest income are credit card fees, such as interchange fees and statement fees, government guaranteed lending revenue (gain on sale), mortgage banking revenue and Windsor Advantage™ fee revenue in connection with its servicing, processing and packaging of SBA and USDA loans for its financial institution clients. Noninterest income does not include (i) loan origination fees to the extent they exceed the direct loan origination costs, which are generally recognized over the life of the related loan as an adjustment to yield using the interest method or (ii) annual, renewal and late fees related to our credit card portfolio, which are generally deferred and recognized over the corresponding twelve-month cardholder service period as an adjustment to yield using the interest method.
Previous wording
For the three months ended June 30, 2026, noninterest income of $14.4 million increased $1.3 million, or 9.6%, from the same period in 2025. The increase was primarily driven by $1.7 million of increased government loan servicing and packaging revenue (Windsor Advantage™), $0.9 million of increased loan servicing rights, and $0.2 million of increased mortgage banking revenue, offset by a $1.9 million decrease in government lending revenue.
Current wording
For the three months ended September 30, 2026, noninterest income of $15.0 million increased $4.0 million, or 35.9%, from the same period in 2025. The increase was primarily driven by $1.5 million of increased government lending revenue mostly from USDA gain on sale, $1.2 million of increased SBIC income reported within other income, $0.8 million of increased government loan servicing and packaging revenue (Windsor Advantage™) driven by growth in servicing income from organic growth in the servicing portfolio, and $0.3 million of increased other income from fees earned from USDA deals which were not executed.
Previous wording
Credit card fees of $4.4 million for the three months ended June 30, 2026 increased $0.1 million as compared to the three months ended June 30, 2025, primarily as a result of growth in the unsecured product.
Current wording
Credit card fees of $4.5 million for the three months ended September 30, 2026 remained consistent as compared to the three months ended September 30, 2025, primarily as a result of growth in the unsecured product offsetting decreases as a result of rate environment.
Previous wording
Originations of loans held for sale within the Bank’s CBHL division increased $26.6 million to $106.9 million in the second quarter of 2026 when compared to $80.3 million in the second quarter of 2025. The gain on sale margin increased to 2.71% for the three months ended June 30, 2026 from 2.68% for the three months ended June 30, 2025.
Current wording
Originations of loans held for sale within the Bank’s CBHL division decreased $5.3 million to $75.3 million in the third quarter of 2026 when compared to $80.7 million in the third quarter of 2025. The gain on sale margin increased to 2.93% for the three months ended September 30, 2026 from 2.56% for the three months ended September 30, 2025.
Previous wording
Mortgage banking revenue of $2.0 million increased $0.2 million from the three months ended June 30, 2025, primarily driven by the increased gain on sale of $0.8 million, offset by a $0.4 million increase in commissions.
Current wording
Mortgage banking revenue of $1.8 million decreased $0.1 million from the three months ended September 30, 2025, primarily driven by the decreased gain on sale of $0.3 million, slightly offset by a $0.2 million increase in the fair value for loans in process (mortgage origination commitments).
Previous wording
Mortgage loans and USDA/SBA loans sold are subject to repurchase in circumstances where documentation is deficient or the underlying loan becomes delinquent or pays off within a specified period following loan funding and sale. The Bank has established a reserve under GAAP for possible repurchases. The reserve was $1.5 million at June 30, 2026 and $2.3 million at December 31, 2025, respectively. The Bank did not repurchase any loans during the six months ended June 30, 2026 or 2025. The Bank does not originate “sub-prime” mortgage loans and has no exposure to this market segment.
Current wording
Mortgage loans and USDA/SBA loans sold are subject to repurchase in circumstances where documentation is deficient or the underlying loan becomes delinquent or pays off within a specified period following loan funding and sale. The Bank has established a reserve under GAAP for possible repurchases. The reserve was $1.5 million at September 30, 2026 and $2.3 million at December 31, 2025, respectively. The Bank did not repurchase any loans during the nine months ended September 30, 2026 or 2025. The Bank does not originate “sub-prime” mortgage loans and has no exposure to this market segment.
Previous wording
Noninterest expense was $43.2 million for the three months ended June 30, 2026, as compared to $39.6 million for the three months ended June 30, 2025, an increase of $3.6 million. The change included increases of $1.7 million in professional fees associated with strategic investments in shared service areas and card partnerships for OpenSky™, $1.6 million of increases in salaries and employee benefits expenses due to headcount growth, $0.9 million in occupancy and equipment due to an increase in software contracts and the acceleration of depreciation of capitalized assets related to OpenSky™ technology, $0.5 million in loan processing costs from loan expenses associated with our government guaranteed lending portfolio, and $0.4 million in advertising expenses. The increased spending was offset by decreases of $1.4 million in merger-related expenses and $0.2 million in operational and other card fraud related losses.
Current wording
Noninterest expense was $45.7 million for the three months ended September 30, 2026, as compared to $38.4 million for the three months ended September 30, 2025, an increase of $7.4 million. The change included $3.4 million of increases in salaries and employee benefits expenses due to planned expansion and investment in headcount across the organization, increases of $2.8 million in professional fees associated with strategic investments in shared service areas and card partnerships for OpenSky™, $1.3 million in occupancy and equipment due to an increase in software contracts and the acceleration of depreciation of capitalized assets related to OpenSky™ technology, $0.9 million in merger-related expenses, and $0.2 million in regulatory assessment expenses. The increased spending was slightly offset by decreases of $0.6 million in loan processing costs from loan expenses associated with our government guaranteed lending portfolio, $0.5 million in other operating expenses, and $0.1 million in advertising expenses.
Previous wording
Income tax expense was $4.2 million and $8.1 million for the three and six months ended June 30, 2026, respectively, compared to $4.0 million and $8.3 million for the same periods, respectively, in 2025. Our effective tax rate decreased from 23.2% for the three months ended June 30, 2025 to 22.8% for the three months ended June 30, 2026 following an updated estimate related to the deferred tax liability associated with fixed assets acquired in the IFH acquisition. Our effective tax rate was unchanged at 23.5% for the six months ended June 30, 2026 compared to the same period in 2025. Additional information regarding the Company’s income taxes are discussed in detail in Note 13 “Income Taxes” in the “Notes to the Consolidated Financial Statements” contained in Part II. Item 8 “Financial Statements and Supplementary Data” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Current wording
Income tax expense was $4.4 million and $12.5 million for the three and nine months ended September 30, 2026, respectively, compared to $4.8 million and $13.1 million for the same periods, respectively, in 2025. Our effective tax rate increased from 24.2% for the three months ended September 30, 2025 to 25.2% for the three months ended September 30, 2026 primarily as a result of nondeductible merger-related costs. Our effective tax rate was 24.1% for the nine months ended September 30, 2026 compared to 23.8% for the same period in 2025 primarily as a result of nondeductible merger-related costs and an updated estimate related to the deferred tax liability associated with fixed assets acquired in the IFH acquisition. Additional information regarding the Company’s income taxes are discussed in detail in Note 13 “Income Taxes” in the “Notes to the Consolidated Financial Statements” contained in Part II. Item 8 “Financial Statements and Supplementary Data” of the 2025 Form 10-K.
Previous wording
Total assets at June 30, 2026 increased $283.7 million from the balance at December 31, 2025. Net portfolio loans, which exclude mortgage loans held for sale, totaled $3.1 billion as of June 30, 2026, an increase of $126.5 million, or 4.3%, from $3.0 billion at December 31, 2025. Mortgage loans held for sale decreased $3.5 million, or 13.4%, when comparing the period end balances at June 30, 2026 and December 31, 2025.
Current wording
Total assets at September 30, 2026 increased $196.3 million from the balance at December 31, 2025. Portfolio loans, net of deferred fees and costs, which exclude loans held for sale, totaled $3.1 billion as of September 30, 2026, an increase of $154.8 million, or 5.2%, from $3.0 billion at December 31, 2025. The loans held for sale balance consists of $60.2 million related to the Chicago Branch Sale and $14.1 million of mortgage loans held for sale. Mortgage loans held for sale decreased $11.7 million, or 45.3%, when comparing the period end balances at September 30, 2026 and December 31, 2025.
Previous wording
As described in Note 2 - ''Investment Securities'' in the “Notes to Unaudited Consolidated Financial Statements,” at June 30, 2026, management determined the Company does not have the intent to sell, nor is it more likely than not that it will be required to sell, available-for-sale debt securities in an unrealized loss position at June 30, 2026 before it is able to recover the amortized cost basis. Further, management reviewed the Company’s holdings as of June 30, 2026 and concluded there were no credit-related declines in fair value. Additional information related to the types of securities held at June 30, 2026, other than securities issued or guaranteed by U.S. Government entities or agencies, is as follows:
Current wording
As described in Note 4 - ''Investment Securities'' in the “Notes to Unaudited Consolidated Financial Statements,” at September 30, 2026, management determined the Company does not have the intent to sell, nor is it more likely than not that it will be required to sell, available-for-sale debt securities in an unrealized loss position at September 30, 2026, before it is able to recover the amortized cost basis. Further, management reviewed the Company’s holdings as of September 30, 2026 and concluded there were no credit-related declines in fair value. Additional information related to the types of securities held at
Previous wording
Municipal Securities – All of the Company’s holdings of municipal bonds were investment grade and there have been no payment defaults. Summary ratings information at June 30, 2026, based on the amortized cost basis and reflecting the lowest enhanced or underlying rating by Moody’s, Standard & Poors or Fitch, is as follows: AAA – 76% of the portfolio; AA+ – 24%.
Current wording
Municipal Securities – All of the Company’s holdings of municipal bonds were investment grade and there have been no payment defaults. Summary ratings information at September 30, 2026, based on the amortized cost basis and reflecting the lowest enhanced or underlying rating by Moody’s, Standard & Poor’s or Fitch, is as follows: AAA – 78% of the portfolio; AA+ – 22%.
Previous wording
Commercial Real Estate Loans. Commercial real estate loans are originated on owner-occupied and non-owner-occupied properties. These loans may be adversely affected by conditions in the real estate markets or in the general economy. Business equity lines of credit totaling $4.9 million as of June 30, 2026 and $3.8 million as of December 31, 2025, are included in the commercial real estate loan category. Business equity lines of credit are commercial purpose lines of credit primarily secured by the business owners’ residential properties. Lender finance loans totaling $50.0 million as of June 30, 2026 and $41.4 million as of December 31, 2025, are also included in the commercial real estate loan category. Lender finance loans are loans to companies used to purchase finance receivables or extend finance receivables to the underlying obligors and are secured primarily by the finance receivables held by our borrowers. The primary sources of repayment are the operating incomes of the borrowers and the collection of the finance receivables securing the loans. Commercial loans that are secured by owner-occupied commercial real estate and primarily collateralized by operating cash flows are included in the commercial real estate loan category. Commercial real estate loan terms are generally extended for 10 years or less and amortize generally over 25 years or less. The interest rates on commercial real estate loans generally have initial fixed rate terms that adjust typically at five years. Origination fees are routinely charged for services. Personal guarantees from the principal owners of the business are generally required, supported by a review of the principal owners’ personal financial statements and global debt service obligations. The properties securing the portfolio are diverse in type. This diversity may help reduce the exposure to adverse economic events that affect any single industry.
Current wording
Commercial Real Estate Loans. Commercial real estate loans are originated on owner-occupied and non-owner-occupied properties. These loans may be adversely affected by conditions in the real estate markets or in the general economy. Business equity lines of credit totaling $4.4 million as of September 30, 2026 and $3.8 million as of December 31, 2025, are included in the commercial real estate loan category. Business equity lines of credit are commercial purpose lines of credit primarily secured by the business owners’ residential properties. Lender finance loans totaling $55.6 million as of September 30, 2026 and $41.4 million as of December 31, 2025, are also included in the commercial real estate loan category. Lender finance loans are loans to companies used to purchase finance receivables or extend finance receivables to the underlying obligors and are secured primarily by the finance receivables held by our borrowers. The primary sources of repayment are the operating incomes of the borrowers and the collection of the finance receivables securing the loans. Commercial loans that are secured by owner-occupied commercial real estate and primarily collateralized by operating cash flows are included in the commercial real estate loan category. Commercial real estate loan terms are generally extended for 10 years or less and amortize generally over 25 years or less. The interest rates on commercial real estate loans generally have initial fixed rate terms that adjust typically at five years. Origination fees are routinely charged for services. Personal guarantees from the principal owners of the business are generally required, supported by a review of the principal owners’ personal financial statements and global debt service obligations. The properties securing the portfolio are diverse in type. This diversity may help reduce the exposure to adverse economic events that affect any single industry.
Previous wording
Credit Cards. Through the OpenSky™ credit card division, the Company offers secured, partially secured, and unsecured credit cards on a nationwide basis to under-banked populations and those looking to rebuild their credit scores through a fully digital and mobile platform. The secured lines of credit are secured by a noninterest-bearing demand account at the Bank in an amount equal to the full credit limit of the credit card. For the partially secured lines of credit, the Bank offers certain customers an unsecured line in excess of their secured line of credit by using a proprietary scoring model, which considers credit score and repayment history (typically a minimum of six months of on-time payments, but ultimately determined on a case-by-case basis). Partially secured and unsecured credit cards are extended to existing secured card customers who have demonstrated sound credit behaviors. Approximately $96.0 million and $97.3 million in secured and partially secured credit card balances were protected by savings deposits held by the Company as of June 30, 2026 and December 31, 2025, respectively. Unsecured balances were $51.2 million and $47.1 million, respectively, at the same dates.
Current wording
Credit Cards. Through the OpenSky™ credit card division, the Company offers secured, partially secured, and unsecured credit cards on a nationwide basis to under-banked populations and those looking to rebuild their credit scores through a fully digital and mobile platform. The secured lines of credit are secured by a noninterest-bearing demand account at the Bank in an amount equal to the full credit limit of the credit card. For the partially secured lines of credit, the Bank offers certain customers an unsecured line in excess of their secured line of credit by using a proprietary scoring model, which considers credit score and repayment history (typically a minimum of six months of on-time payments, but ultimately determined on a case-by-case basis). Partially secured and unsecured credit cards are extended to existing secured card customers who have demonstrated sound credit behaviors. Approximately $93.7 million and $97.3 million in secured and partially secured credit card balances were protected by savings deposits held by the Company as of September 30, 2026 and December 31, 2025, respectively. Unsecured balances were $57.6 million and $47.1 million, respectively, at the same dates.
Previous wording
(2)Other non-owner-occupied commercial real estate loans include special purpose loans of $14.7 million, multi-family loans of $8.5 million, skilled nursing loans of $8.4 million, a land loan of $7.3 million, and other loans of $8.2 million.
Current wording
(2)Other non-owner-occupied commercial real estate loans include special purpose loans of $13.4 million, multi-family loans of $9.0 million, skilled nursing loans of $8.4 million, a land loan of $7.2 million, and other loans of $10.7 million.
Previous wording
(3)Other owner-occupied commercial real estate loans include special purpose loans of $96.6 million, skilled nursing loans of $30.8 million, $25.1 million of religious facility loans and other loans of $20.4 million.
Current wording
(3)Other owner-occupied commercial real estate loans include special purpose loans of $92.4 million, skilled nursing loans of $32.6 million, $24.8 million of religious facility loans and other loans of $19.7 million.
Previous wording
At June 30, 2026, the recorded investment in individually assessed loans was $56.7 million, requiring a specific reserve of $8.3 million. At December 31, 2025, the recorded investment in individually assessed loans was $52.8 million, requiring a specific reserve of $9.9 million.
Current wording
At September 30, 2026, the recorded investment in individually assessed collateral dependent loans was $20.7 million, requiring a specific reserve of $6.0 million. At December 31, 2025, the recorded investment in individually assessed collateral dependent loans was $13.8 million, requiring a specific reserve of $5.6 million.
Previous wording
At June 30, 2026, nonperforming loans were $57.0 million, an increase of $2.6 million from December 31, 2025. The $2.6 million increase was in line with the growth in loans, as nonperforming assets as a percentage of total assets decreased from 1.62% at December 31, 2025 to 1.56% at June 30, 2026.
Current wording
At September 30, 2026, nonperforming loans were $56.7 million, an increase of $2.2 million from December 31, 2025. Nonperforming loans as a percentage of total portfolio loans decreased 2 basis points from 1.84% at December 31, 2025 to 1.82% at September 30, 2026. Nonperforming assets as a percentage of total assets decreased 3 basis points from 1.62% at December 31, 2025 to 1.59% at September 30, 2026.
Previous wording
The past due loans balance increased $26.9 million, from $93.5 million or 3.2% of gross loans as of December 31, 2025 to $120.4 million or 3.9% of gross loans as of June 30, 2026. The increase was primarily driven by $16.7 million of increases in C&I loans and $12.6 million of increases in construction loans. Within C&I loans, one relationship across two loans contributed $21.2 million of the past due loans. The two loans were modified in July 2026, and payments received under the modification brought the loans to current status as of the date of this report. Excluding this customer, the past due C&I loans balance as of June 30, 2026, decreased $4.5 million. It was noted in the previous quarter that a single relationship for 3 construction real estate loans accounted for $9.7 million of the increase in 30-59 days past due loans, for which construction has stalled. The loans are now 90+ days past due and foreclosure sales are expected on the underlying properties. A specific reserve of $0.8 million has been recorded on one of the loans. Management believes the credit remains appropriately monitored and reflected within the allowance for credit losses.
Current wording
The past due loans balance increased $8.2 million, from $93.5 million or 3.2% of gross loans as of December 31, 2025 to $101.7 million or 3.3% of gross loans as of September 30, 2026. The increase was primarily driven by $9.3 million of increases in construction loans. It was noted in the previous quarter that a single relationship for 3 construction real estate loans accounted for $9.7 million of the increase in 30-59 days past due loans, for which construction has stalled. The loans are 90+ days past due and the underlying properties on the loans proceeded to foreclosure. The foreclosure sales have occurred and the Bank was the successful bidder through its credit bids; the sale remains subject to court ratification. Management expects recovery to be realized through disposition of the collateral and a specific reserve of $0.8 million continues to be recorded for one of the loans. Management believes the credit remains appropriately monitored and the exposure is appropriately reflected within the allowance for credit losses.
Previous wording
At June 30, 2026, the ACL coverage ratio was 1.76%, down 9 bps from December 31, 2025 and up 3 bps compared to June 30, 2025.
Current wording
At September 30, 2026, the ACL coverage ratio was 1.78%, down 7 bps from December 31, 2025 and down 10 bps compared to September 30, 2025.
Showing the first 40 of 60 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
September 30, 2026, other than securities issued or guaranteed by U.S. Government entities or agencies, is as follows:
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
•our ability to remediate the material weakness in the Company’s internal control over financial reporting.
Previous report — wording carried elsewhere
The Company currently operates four divisions and reporting segments: Commercial Banking,
Previous report — wording carried elsewhere
Statements” contained in Item 8 “Financial Statements and Supplementary Data” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.