Stock Yards Bancorp, Inc.

Previous wording

SYB, established in 1904, is a state-chartered non-member financial institution that provides services in Louisville, central, eastern and northern Kentucky, as well as the Indianapolis, Indiana and Cincinnati, Ohio markets through 75 full service banking center locations. The Bank is registered with, and subject to supervision, regulation and examination by the FDIC and the Kentucky Department of Financial Institutions.

Current wording

SYB, established in 1904, is a state-chartered non-member financial institution that provides services throughout the state of Kentucky, as well as the Indianapolis, Indiana and Cincinnati, Ohio markets through 81 full service banking center locations. The Bank is registered with, and subject to supervision, regulation and examination by the FDIC and the Kentucky Department of Financial Institutions.

Previous wording

At March 31, 2026, Bancorp’s loan portfolio consisted of approximately 63% fixed and 37% variable rate loans. At inception, most of Bancorp’s fixed rate loans are generally priced in relation to the five year treasury note. Bancorp’s variable rate loans are typically indexed to either Prime or one month term SOFR, repricing as those rates change. At March 31, 2026, approximately 54% and 46% of Bancorp’s variable rate loan portfolio was indexed to Prime and SOFR, respectively.

Current wording

At June 30, 2026, Bancorp’s loan portfolio consisted of approximately 64% fixed and 36% variable rate loans. At inception, most of Bancorp’s fixed rate loans are generally priced in relation to the five year treasury note. Bancorp’s variable rate loans are typically indexed to either Prime or one month term SOFR, repricing as those rates change. At June 30, 2026, approximately 55% and 45% of Bancorp’s variable rate loan portfolio was indexed to Prime and SOFR, respectively.

Previous wording

Towards the end of 2025, slight steepness on the longest portion of the yield curve began to be experienced, as three consecutive 25 bps rate reductions from the FRB in September, October and December resulted in the FFTR falling to a range of 3.50% - 3.75%, and Prime to 6.75%, as of December 31, 2025. These levels were maintained through March 31, 2026. However, despite a slight improvement in the overall yield curve’s trajectory, the shorter end of the curve that is most critical to Bancorp’s business (overnight through 5 years) remained relatively flat through the first quarter of this year.

Current wording

Towards the end of 2025, slight steepness on the longest portion of the yield curve began to be experienced, as three consecutive 25 bps rate reductions from the FRB in September, October and December resulted in the FFTR falling to a range of 3.50% - 3.75%, and Prime to 6.75%, as of December 31, 2025. While these levels were maintained through June 30, 2026, the yield curve continued to improve during the first half of this year, with spreads on the portion of the curve that is most critical to Bancorp’s business (overnight through 5 years) showing a semblance of normalization during the second quarter after battling flatness/inversion during the first three months of 2026.

Previous wording

The NIM expansion experienced during the three months ended March 31, 2026 compared to recent quarters was attributed mainly to a continued decline in the cost of interest-bearing deposits. Bancorp strategically lowered deposit rates in tandem with FRB rate reductions and the repricing of the time deposit portfolio as the prior year’s promotional rates have adjusted to lower current offerings has provided significant benefit to NIM. In addition, while earning-asset yields have been challenged by lower rates, excess liquidity provided by deposit growth and the scheduled maturity of lower-yielding investment securities over the past 12 months has been used to fund higher-yielding loan growth, serving to buoy yields.

Current wording

The NIM expansion experienced during the three months ended June 30, 2026 compared to recent quarters was attributed mainly to a continued decline in the cost of interest-bearing deposits. Bancorp strategically lowered deposit rates in tandem with FRB rate reductions and the repricing of the time deposit portfolio as the prior year’s promotional rates have adjusted to lower current offerings has provided significant benefit to NIM. In addition, while earning-asset yields have been challenged by lower rates, excess liquidity provided by deposit growth and the scheduled maturity of lower-yielding investment securities over the past 12 months has been used to fund higher-yielding loan growth, providing gradual improvement to yields.

Previous wording

Net interest spread (FTE) and NIM (FTE) were 3.08% and 3.65%, for the three months ended March 31, 2026, compared to 2.83% and 3.46% for the same period of 2025, respectively.

Current wording

Net interest spread (FTE) and NIM (FTE) were 3.26% and 3.84%, for the three months ended June 30, 2026, compared to 2.87% and 3.53% for the same period of 2025, respectively.

Previous wording

Total average interest earning assets increased $464 million, or 6%, for the three months ended March 31, 2026, as compared to the same period of 2025, attributed to average loan and interest-bearing cash balance growth that was partially offset by a decline in average investment securities driven by scheduled maturities and normal amortization. The rate earned on average earning assets increased 1 bp to 5.47% despite the impact of rate reductions implemented by the FRB in the latter part of 2025, as liquidity provided by the scheduled maturity of lower-yielding securities helped fund higher-yielding loan growth.

Current wording

Total average interest earning assets increased $810 million, or 10%, for the three months ended June 30, 2026, as compared to the same period of 2025, attributed to both organic average earning asset growth and the impact of the FM acquisition, which was partially offset by a decline in average investment securities driven by scheduled maturities and normal amortization. The rate earned on average earning assets increased 9 bps to 5.61% despite the impact of rate reductions implemented by the FRB in the latter part of 2025, as liquidity provided by the scheduled maturity of lower-yielding securities helped fund higher-yielding organic loan growth and earning assets added through the FM acquisition helped boost yields.

Previous wording

Total average interest bearing liabilities increased $394 million, or 6%, to $6.65 billion for the three month period ended March 31, 2026 compared with the same period in 2025.

Current wording

Total average interest bearing liabilities increased $628 million, or 10%, to $6.91 billion for the three month period ended June 30, 2026 compared with the same period in 2025, driven by both organic growth and the impact of the FM acquisition.

Previous wording

Net interest income (FTE) increased $7.9 million, or 11%, for the three months ended March 31, 2026 compared to the same period of 2025, driven by the impact of strong average loan growth on interest income and a decline in interest expense related to eliminating the need for the more expensive overnight borrowings that were utilized through the first quarter of 2025.

Current wording

Net interest income (FTE) increased $22.2 million, or 15%, for the six months ended June 30, 2026 compared to the same period of 2025, driven by the impact of strong organic average loan growth on interest income, a decline in interest expense related to eliminating the need for the more expensive overnight borrowings that were utilized through the first quarter of 2025 and the impact of the FM acquisition, the latter of which represents two months worth of activity.

Previous wording

Bancorp’s loan portfolio is currently composed of approximately 63% fixed and 37% variable rate loans, with the fixed rate portion pricing generally based on a spread to the five year treasury curve at the time of origination and the variable portion pricing based on an on-going spread to Prime (approximately 54%) or SOFR (approximately 46%).

Current wording

Bancorp’s loan portfolio is currently composed of approximately 64% fixed and 36% variable rate loans, with the fixed rate portion pricing generally based on a spread to the five year treasury curve at the time of origination and the variable portion pricing based on an on-going spread to Prime (approximately 55%) or SOFR (approximately 45%).

Previous wording

The ACL for loans totaled $94 million as of March 31, 2026 compared to $89 million at March 31, 2025, representing an ACL to total loans ratio of 1.30% and 1.34% for the respective periods.

Current wording

The ACL for loans totaled $109 million as of June 30, 2026 compared to $91 million at June, 2025, representing an ACL to total loans ratio of 1.38% and 1.32% for the respective periods. The ACL for loans was increased $16 million as a result of the loan portfolio added through the FM acquisition during the second quarter, with the corresponding offset recorded to goodwill (as opposed to provision for credit loss expense).

Previous wording

Provision expense on loans of $1.6 million was recorded for the three month period ended March 31, 2026, driven primarily by strong loan growth, which was only partially offset by improvement in the unemployment forecast and decreased specific reserves. Net recoveries of $104,000 were recorded for the three month period ended March 31, 2026.

Current wording

No provision expense on loans was recorded for the three month period ended June 30, 2026, consistent with muted organic loans growth, strong credit quality metrics and annual CECL methodology updates made during the second quarter. Provision expense on loans totaling $1.6 million was recorded for the six month period ended June 30, 2026, driven primarily by strong organic loan growth that was concentrated in the first quarter and was only partially offset by improvement in the unemployment forecast and decreased specific reserves. Net charge off/recovery activity was minimal for both the three and six month periods ended June 30, 2026.

Previous wording

Provision expense on loans of $900,000 was recorded for the three month period ended March 31, 2025. Expense for the prior year period was attributed mainly to strong loan growth, increased specific reserves, and to a lesser extent, slight deterioration within the unemployment forecast, which were partially offset by annual CECL model updates. Additionally, net recoveries of $971,000 were recorded for the three month period ended March 31, 2025.

Current wording

Provision expense on loans of $2.3 million and $3.2 million was recorded for the three and six month periods ended June 30, 2025. While expense for both periods of the prior year were consistent with strong loan growth, slight deterioration within the unemployment forecast and increased specific reserves, expense for the six month period was also impacted by annual CECL model updates made during the first quarter of 2025. Net charge offs of $342,000 and net recoveries of $629,000 were recorded for the three and six month periods ended June 30, 2025, respectively.

Previous wording

Total non-interest income increased $1.6 million, or 7%, for the three month period ended March 31, 2026 compared to the same period of 2025. Non-interest income comprised 23.9% of total revenues, defined as net interest income and non-interest income, for the three month period ended March 31, 2026 compared to 24.6% for the same period of 2025. The decrease from prior year were attributed to the increase in net interest income compared to prior year. WM&T services comprised 46.1% of total non-interest income for the three month period ended March 31, 2026 compared to 46.3% for the same period of the prior year.

Current wording

Total non-interest income increased $2.4 million, or 10%, and $4.0 million, or 8%, for the three and six month periods ended June 30, 2026 compared to the same periods of 2025. Non-interest income comprised 23.3% and 23.6% of total revenues, defined as net interest income and non-interest income, for the three and six month periods ended June 30, 2026 compared to 24.9% and 24.7% for the same periods of 2025. The decreases from the prior year are attributed to net interest income growth outpacing non-interest income. WM&T services comprised 47.0% and 46.5% of total non-interest income for the three and six month periods ended June 30, 2026 compared to 43.0% and 44.6% for the same periods of the prior year. The increases over the prior year were driven by WM&T revenue growth outpacing the other non-interest income categories.

Previous wording

The magnitude of WM&T revenue distinguishes Bancorp from other community banks of similar asset size. WM&T revenue increased $688,000, or 6%, for the three month period ended March 31, 2026, as compared with the same period of 2025, attributed to AUM expansion over the past 12 months, which has been driven by both general market appreciation and new business development.** **

Current wording

The magnitude of WM&T revenue distinguishes Bancorp from other community banks of similar asset size. WM&T revenue increased $2.1 million, or 20%, and $2.8 million, or 13%, for the three and six month periods ended June 30, 2026, as compared with the same periods of 2025, attributed to AUM expansion over the past 12 months, which has been driven by both general market appreciation and new business development in addition to the impact of the FM acquisition, the latter of which contributed approximately $789,000 in revenue for the three and six month periods ended June 30, 2026.

Previous wording

Recurring fees earned for managing accounts are based on a percentage of market value of AUM and are typically assessed on a monthly basis. Recurring fees, which generally comprise the vast majority of WM&T revenue, increased $801,000, or 8%, for the three month period ended March 31, 2026, as compared with the same period of 2025, consistent with AUM expansion and general market appreciation.

Current wording

Recurring fees earned for managing accounts are based on a percentage of market value of AUM and are typically assessed on a monthly basis. Recurring fees, which generally comprise the vast majority of WM&T revenue, increased $2.2 million, or 21%, and $3.0 million, or 14%, for the three and six month periods ended June 30, 2026, as compared with the same periods of 2025, consistent with AUM expansion, general market appreciation and the impact of the FM acquisition.

Previous wording

A portion of WM&T revenue, most notably executor and certain employee benefit plan-related fees, are non-recurring in nature and the timing of these revenues corresponds with the related administrative activities. For this reason, such fees are subject to greater period over period fluctuation. Total non-recurring fees decreased $113,000, or 36%, for the three month period ended March 31, 2026, as compared with the same period of 2025, due to the prior year period experiencing stronger estate fee revenue.

Current wording

A portion of WM&T revenue, most notably executor and certain employee benefit plan-related fees, are non-recurring in nature and the timing of these revenues corresponds with the related administrative activities. For this reason, such fees are subject to greater period over period fluctuation. Total non-recurring fees decreased $76,000, or 25%, and $189,000, or 29%, for the three and six month periods ended June 30, 2026, as compared with the same periods of 2025, due to the prior year periods experiencing stronger estate fee revenue.

Previous wording

AUM, stated at market value, totaled $7.60 billion at March 31, 2026 compared with $7.64 billion at December 31, 2025 and $6.80 billion at March 31, 2025. The increase in AUM between March 31, 2025 and March 31, 2026 was attributed to appreciation within the equity and fixed income markets in addition to new business development over the past 12 months.

Current wording

AUM, stated at market value, totaled $8.84 billion at June 30, 2026 compared with $7.64 billion at December 31, 2025 and $7.19 billion at June 30, 2025. The increase in AUM between June 30, 2025 and June 30, 2026 was attributed largely to the impact of the FM acquisition, but was also driven by appreciation within the equity and fixed income markets in addition to organic new business development over the past 12 months. AUM attributed to FM totaled $890 million as of June 30, 2026.

Previous wording

AUM (not included on balance sheet) increased from $7.64 billion at December 31, 2025 to $7.60 billion at March 31, 2026 as follows:

Current wording

AUM (not included on balance sheet) increased from $7.64 billion at December 31, 2025 to $8.84 billion at June 30, 2026 as follows:

Previous wording

As of March 31, 2026 and December 31, 2025, approximately 81% and 80% of AUM were actively managed, respectively. Company retirement plan accounts consist primarily of participant-directed assets. The amount of custody and safekeeping accounts are insignificant to overall WM&T operations.

Current wording

As of June 30, 2026 and December 31, 2025, approximately 83% and 80% of AUM were actively managed, respectively. Company retirement plan accounts consist primarily of participant-directed assets. The amount of custody and safekeeping accounts are insignificant to overall WM&T operations.

Previous wording

Managed assets are invested in instruments for which market values can be readily determined, the majority of which are sensitive to market fluctuations and consist of approximately 63% in equities and 37% in fixed income securities as of March 31, 2026, compared to 65% and 35% as of December 31, 2025. This composition has remained relatively consistent from period to period.

Current wording

Managed assets are invested in instruments for which market values can be readily determined, the majority of which are sensitive to market fluctuations and consist of approximately 66% in equities and 34% in fixed income securities as of June 30, 2026, compared to 65% and 35% as of December 31, 2025. This composition has remained relatively consistent from period to period.

Previous wording

Deposit service charges, which consist of non-sufficient funds charges and to a lesser extent, other activity based charges, increased $77,000, or 4%, for the three month period ended March 31, 2026, as compared with the same period of 2025. Consistent with the banking industry generally, Bancorp has experienced a steady decline in the volume of fees earned on overdrawn checking accounts over the past several years. This trend has been driven by lower check presentment volume, which has in turn led to fewer overdrawn accounts in general. Further, Bancorp anticipates that future growth of this revenue stream could be significantly impacted by changing industry practices. Bancorp could be faced with strategic decisions surrounding deposit-related service charges in the future, which could negatively impact the contributions made by this, or similar, revenue streams.

Current wording

Deposit service charges, which consist of non-sufficient funds charges and to a lesser extent, other activity based charges, increased $299,000, or 14%, and $376,000, or 9%, for the three and six month periods ended June 30, 2026, as compared with the same periods of 2025, driven by both acquisition-related activity and organic growth. However, consistent with the banking industry generally, Bancorp has experienced a steady decline in the volume of fees earned on overdrawn checking accounts over the past several years. This trend has been driven by lower check presentment volume, which has in turn led to fewer overdrawn accounts in general. Further, Bancorp will be implementing compliance-related changes associated with regulatory deposit settlement requirements during the third quarter of 2026, which are consistent with changing industry practices and will negatively impact this revenue stream.

Previous wording

Debit and credit card income consists of interchange revenue, ancillary fees and incentives received from card processors. Debit and credit card revenue increased $130,000, or 3%, for the three month period ended March 31, 2026, as compared with the same period of 2025, driven mainly by higher debit card transaction volume. Total debit card income increased $141,000, or 5%, and total credit card income decreased $11,000, or less than 1% for the three month period ended March 31, 2026, compared the same period of the prior year. While Bancorp generally expects this revenue stream to grow with continued expansion of the customer base, interchange rate compression and fluctuations in business and consumer spend levels could serve as challenges to future growth.

Current wording

Debit and credit card income consists of interchange revenue, ancillary fees and incentives received from card processors. Debit and credit card revenue increased $307,000, or 6%, and $437,000, or 5%, for the three and six month periods ended June 30, 2026, as compared with the same periods of 2025, attributed to both acquisition-related activity and organic growth. Debit card income increased $374,000, or 11%, and $515,000, or 8%, and total credit card income decreased $67,000, or 4%, and $78,000, or 3%, for the three and six month periods ended June 30, 2026 compared the same periods of the prior year. While Bancorp generally expects this revenue stream to grow with continued expansion of the customer base, interchange rate compression and fluctuations in business and consumer spend levels could serve as challenges to future growth. Further, Bancorp will be subject to regulatory limitations on interchange transaction fees for debit card transactions after total consolidated assets exceed $10 billion as of any given December 31, which will negatively impact this revenue stream. Such limitations begin on July 1 of the calendar year immediately following the year an institution crosses this threshold. Bancorp expects to officially cross the $10 billion threshold for regulatory purposes on December 31, 2027.

Previous wording

Treasury management fees primarily consist of fees earned for cash management services provided to commercial customers. Treasury management fees increased $315,000, or 12%, for the year ended March 31, 2026, as compared with the same period of 2025, driven by broad fee increases implemented towards the end of the first quarter of 2025 in addition to organic growth and new product sales.** **Treasury management fees have seen significant annual growth over the past several years, due in large part to acquisition-related customer base expansion and organic growth that was augmented by new product sales, including increased demand for fraud prevention services. To the extent such activity cannot be replicated, future treasury management fee revenue will likely grow at a slower pace than has been experienced in recent years.

Current wording

Treasury management fees primarily consist of fees earned for cash management services provided to commercial customers. Treasury management fees increased $170,000, or 6%, and $485,000 or 9%, for the year ended June 30, 2026 as compared with the same periods of 2025, driven by broad fee increases implemented towards the end of the first quarter of 2025 in addition to organic growth and new product sales. While the FM acquisition had little impact on overall treasury management fee income for the three and six month periods ended June 30, 2026, the customer base added through the acquisition is expected to provide opportunities for future growth given Bancorp’s ability to offer these new customers a broader array of treasury services.

Previous wording

Mortgage banking income primarily includes gains on sales of mortgage loans and net loan servicing income offset by MSR amortization. Bancorp’s mortgage banking department predominantly originates residential mortgage loans to be sold in the secondary market, primarily to FNMA and FHLMC. Bancorp offers conventional, VA, FHA and GNMA financing for purchases and refinances, as well as programs for first-time homebuyers. Interest rates on mortgage loans directly influence the volume of business transacted by the mortgage-banking department. Mortgage banking revenue increased $13,000, or 1%, for the three month period ended March 31, 2026, as compared with the same period of 2025.

Current wording

Mortgage banking income primarily includes gains on sales of mortgage loans and net loan servicing income offset by MSR amortization. Bancorp’s mortgage banking department predominantly originates residential mortgage loans to be sold in the secondary market, primarily to FNMA and FHLMC. Bancorp offers conventional, VA, FHA and GNMA financing for purchases and refinances, as well as programs for first-time homebuyers. Interest rates on mortgage loans directly influence the volume of business transacted by the mortgage-banking department. Mortgage banking revenue decreased $81,000, or 7%, and $68,000, or 3%, for the three and six month periods ended June 30, 2026, as compared with the same periods of 2025. While overall volumes have remained steady, yields on mortgage loans sold in the secondary market have declined as a result of competitive pricing pressures, negatively impacting mortgage banking revenue. The FM acquisition had minimal impact on mortgage banking revenue for the three and six months ended June 30, 2026.

Previous wording

Net investment product sales commissions and fees are generated primarily on stock, bond and mutual fund sales, as well as wrap fees earned on brokerage accounts via an arrangement with a third party broker-dealer. Wrap fees represent charges for investment programs that bundle together a suite of services, such as brokerage, advisory, research and management and are based on a percentage of account assets. Bancorp deploys its financial advisors primarily through its branch network, while larger managed accounts are generally serviced by Bancorp’s WM&T group. Net investment product sales commissions and fees increased $51,000, or 5%, for the three month period ended March 31, 2026 compared to the same period of 2025.

Current wording

Net investment product sales commissions and fees are generated primarily on stock, bond and mutual fund sales, as well as wrap fees earned on brokerage accounts via an arrangement with a third party broker-dealer. Wrap fees represent charges for investment programs that bundle together a suite of services, such as brokerage, advisory, research and management and are based on a percentage of account assets. Bancorp deploys its financial advisors primarily through its branch network, while larger managed accounts are generally serviced by Bancorp’s WM&T group. Net investment product sales commissions and fees increased $94,000, or 10%, and $145,000, or 7%, for the three and six month periods ended June 30, 2026 compared to the same periods of 2025. The FM acquisition had minimal impact on this non-interest revenue stream.

Previous wording

BOLI assets represent the cash surrender value of life insurance policies on certain active and non-active employees who have provided consent for Bancorp to be the beneficiary for a portion of such policies. The related change in cash surrender value and any death benefits received under the policies are recorded as non-interest income and serves to offset the cost of various employee benefits. BOLI income increased $10,000, or 2%, for the year ended March 31, 2026 compared to the same period of 2025, consistent with yields within the policy plans.

Current wording

BOLI assets represent the cash surrender value of life insurance policies on certain active and non-active employees who have provided consent for Bancorp to be the beneficiary for a portion of such policies. The related change in cash surrender value and any death benefits received under the policies are recorded as non-interest income and serves to offset the cost of various employee benefits. BOLI income increased $62,000, or 10%, and $72,000, or 6%, for the three and six month periods ended June 30, 2026 compared to the same periods of 2025, primarily as a result of adding BOLI assets totaling approximately $13 million as a result of the FM acquisition.

Previous wording

Total non-interest expenses increased $4.2 million, or 8%, for the three month period ended March 31, 2026 compared to the same period of 2025. Compensation and employee benefits comprised 64.0% of Bancorp’s total non-interest expenses for the three month period ended March 31, 2026, compared to 62.2% for the same period of 2025, the increase being attributed to general FTE growth and higher bonus accrual levels compared to the prior year.

Current wording

Total non-interest expenses increased $11.1 million, or 21%, and $15.3 million, or 15%, for the three and six month periods ended June 30, 2026 compared to the same periods of 2025. Compensation and employee benefits comprised 60.4% and 62.1% of Bancorp’s total non-interest expenses, excluding one-time merger-related expenses, for the three and six month periods ended June 30, 2026, compared to 61.9% and 62.0% for the same periods of 2025.

Previous wording

Compensation, which includes salaries, incentives, bonuses and stock based compensation, increased $3.2 million, or 12%, for the three month period ended March 31, 2026, as compared with the same period of 2025. The increase was attributed primarily to growth in full time equivalent employees, which included a focus on sales team expansion, annual merit-based salary increases and higher bonus accrual levels. Net full time equivalent employees totaled 1,144 at March 31, 2026 compared to 1,089 at March 31, 2025.

Current wording

Compensation, which includes salaries, incentives, bonuses and stock based compensation, increased $3.7 million, or 13%, and $6.9 million, or 13%, for the three and six month periods ended June 30, 2026, as compared with the same periods of 2025. The increase was attributed primarily to growth in full time equivalent employees, including the impact of the FM acquisition and a focus on sales team expansion, annual merit-based salary increases and higher bonus accrual levels. Net full time equivalent employees totaled 1,270 at June 30, 2026 compared to 1,118 at June 30, 2025.

Previous wording

Employee benefits consists of all personnel-related expense not included in compensation, with the most significant items being health insurance, payroll taxes and employee retirement plan contributions. Employee benefits increased $384,000, or 7%, for the three month period ended March 31, 2026, as compared with the same period of 2025, driven mainly by the previously mentioned growth in FTEs and higher health insurance claims activity.

Current wording

Employee benefits consists of all personnel-related expense not included in compensation, with the most significant items being health insurance, payroll taxes and employee retirement plan contributions. Employee benefits increased $853,000, or 16%, and $1.2 million, or 11%, for the three and six month periods ended June 30, 2026, as compared with the same periods of 2025, driven mainly by the previously mentioned growth in FTEs, including the impact of the FM acquisition.

Previous wording

Net occupancy and equipment expenses primarily include depreciation, rent, property taxes, utilities and maintenance. Costs of capital asset additions flow through the statement of income over the lives of the assets in the form of depreciation expense. Net occupancy expense increased $197,000, or 5%, for the three month period ended March 31, 2026, as compared with the same period of 2025, consistent with branch network expansion in addition to higher rent and depreciation expense. Three new branch locations were opened over the past 12 months. At March 31, 2026, Bancorp’s branch network consisted of 75 locations throughout Louisville, central, eastern and Northern Kentucky, as well as the MSAs of Indianapolis, Indiana and Cincinnati, Ohio.

Current wording

Net occupancy and equipment expenses primarily include depreciation, rent, property taxes, utilities and maintenance. Costs of capital asset additions flow through the statement of income over the lives of the assets in the form of depreciation expense. Net occupancy expense increased $720,000, or 18%, and $917,000, or 11%, for the three and six month periods ended June 30, 2026, as compared with the same periods of 2025, consistent with the impact of the FM acquisition and organic branch network expansion in addition to higher rent and depreciation expense. In addition to the six full-service locations added through the FM acquisition, three new branch locations were opened over the past 12 months. At June 30, 2026, Bancorp’s branch network consisted of 81 locations throughout the state of Kentucky, as well as the MSAs of Indianapolis, Indiana and Cincinnati, Ohio.

Previous wording

Technology and communication expenses include computer software usage and licensing fees, equipment depreciation and expenditures related to investments in technology needed to maintain and improve the quality of customer delivery channels, information security and internal resources. Technology expense increased $507,000, or 11%, for the three month period ended March 31, 2026 compared to the same period of 2025, consistent with several planned investments, including the development of advanced data analytics capabilities.

Current wording

Technology and communication expenses include computer software usage and licensing fees, equipment depreciation and expenditures related to investments in technology needed to maintain and improve the quality of customer delivery channels, information security and internal resources. Technology expense increased $1.6 million, or 35%, and $2.2 million, or 22%, for the three and six month periods ended June 30, 2026 compared to the same periods of 2025, consistent with several planned investments, including the development of advanced data analytics capabilities, and the impact of the FM acquisition.

Previous wording

Bancorp outsources processing for debit and credit card operations, which generate significant revenue for the Company. These expenses typically fluctuate consistent with transaction volumes. Debit and credit card processing expense increased $103,000, or 6%, for the three month period ended March 31, 2026 compared to the same period of 2025, driven by higher processing fees, including increased fraud-mitigation and prevention expenses.

Current wording

Bancorp outsources processing for debit and credit card operations, which generate significant revenue for the Company. These expenses typically fluctuate consistent with transaction volumes. Debit and credit card processing expense increased $218,000, or 11%, and $321,000, or 9%, for the three and six month periods ended June 30, 2026 compared to the same periods of 2025, driven by higher processing fees, including increased fraud-mitigation and prevention expenses, in addition to the impact of the FM acquisition.

Previous wording

Marketing and business development expenses include all costs associated with promoting Bancorp, including community support, retaining customers and acquiring new business. Marketing and business development expenses decreased $237,000, or 16%, for the three month period ended March 31, 2026, as compared to the same period of 2025, driven by the higher advertising expense incurred in the prior year tied to deposit product promotions.** **

Current wording

Marketing and business development expenses include all costs associated with promoting Bancorp, including community support, retaining customers and acquiring new business. Marketing and business development expenses increased $286,000, or 15%, and $49,000, or 1%, for the three and six month periods ended June 30, 2026, as compared to the same periods of 2025. Increased expense for the three month period compared to the prior year was driven primarily by higher customer entertainment spending in addition to the impact of the FM acquisition, but the minimal increase experienced for the six month period was the result of elevated advertising expense incurred in the first quarter of the prior year tied to deposit product promotions.** **

Previous wording

Legal and professional fees decreased $31,000, or 3%, for the three month period ended March 31, 2026 compared to the same period of 2025, driven by lower collections-related expenses and professional fees, which were partially offset by an increase in general corporate legal matters.

Current wording

Legal and professional fees increased $271,000, or 25%, and $240,000, or 12%, for the three and six month periods ended June 30, 2026 compared to the same periods of 2025, driven by an increase in expenses related to general corporate legal matters and the impact of the FM acquisition.

Previous wording

FDIC insurance expense decreased $77,000, or 6%, for the three month period ended March 31, 2026, as compared to the same period of 2025, attributed in part to a lower assessment rate related mainly to improvement in Bancorp’s leverage ratio.

Current wording

FDIC insurance expense decreased $151,000, or 12%, and $228,000, or 9%, for the three and six month periods ended June 30, 2026, as compared to the same periods of 2025, attributed in part to a lower assessment rate related mainly to improvement in Bancorp’s leverage ratio.

Previous wording

Capital and deposit based taxes, which consist primarily of capital-based local income taxes and franchise taxes, increased $178,000, or 25%, for the three month period ended March 31, 2026 compared to the same period of 2025. Bancorp’s capital and deposit based tax expense is based on deposits held within various local taxing districts, as well as gross revenues generated within/appropriated to the state of Ohio, which is the only state Bancorp operates in with a capital-based deposit tax. The increase over the prior year stemmed mainly from the substantial deposit growth experienced over the past 12 months.

Current wording

Capital and deposit based taxes, which consist primarily of capital-based local income taxes and franchise taxes, increased $238,000, or 32%, and $416,000, or 29%, for the three and six month periods ended June 30, 2026 compared to the same periods of 2025, as a result of the substantial deposit growth experienced over the past 12 months. Bancorp’s capital and deposit based tax expense is based on deposits held within various local taxing districts, as well as gross revenues generated within/appropriated to the state of Ohio, which is the only state Bancorp operates in with a capital-based deposit tax.

Previous wording

Intangible amortization expense consists of amortization associated with the CDI of acquired deposit portfolios, as well as an intangible related to customer list of the WM&T business line added through a past acquisition. The intangibles are amortized on an accelerated basis over a period of approximately ten years. Intangible amortization expense decreased $115,000, or 13%, for the three month period ended March 31, 2026 compared to the same period of 2025, which is attributed to the accelerated depreciation method for which intangible assets are amortized.

Current wording

Intangible amortization expense consists of amortization associated with the CDI of acquired deposit portfolios, as well as intangibles related to customer lists of WM&T business lines added through a past acquisition. The intangibles are amortized on an accelerated basis over a period of approximately ten years. Intangible amortization expense increased $631,000, or 69%, and $516,000, or 28%, for the three and six month periods ended June 30, 2026 compared to the same periods of 2025, which is attributed entirely to the CDI and CLI assets added through the FM acquisition.

Previous wording

Other non-interest expenses increased $128,000, or 6%, for the three month period ended March 31, 2026, as compared to the same period of 2025, driven mainly by costs associated with the new ICS deposit product offering in addition to other miscellaneous expenses.

Current wording

Other non-interest expenses increased $346,000, or 14%, and $474,000, or 10%, for the three and six month periods ended June 30, 2026 as compared to the same periods of 2025, driven mainly by costs associated with growth in the ICS deposit product offering and the impact of the FM acquisition in addition to other miscellaneous expenses.

Previous wording

Total assets decreased $69 million, or 1%, to $9.47 billion at March 31, 2026 from $9.54 billion at December 31, 2025. The decrease for the first three months of 2026 was attributed to a $220 million, or 25%, decrease in cash and cash equivalents and a $35 million, or 4%, decline in investment securities, as liquidity was used to fund $185 million, or 3%, of net loan growth and deposit contraction.

Current wording

Total assets increased $832 million, or 9%, to $10.37 billion at June 30, 2026 from $9.54 billion at December 31, 2025. Total assets, including purchase accounting adjustments, of $839 million were added on May 1, 2026 as a result of the FM acquisition, including net loans of $626 million. Goodwill of $44 million was recorded in relation to this acquisition. Excluding the impact of the acquisition, total assets decreased $7 million during the first six months of 2026. The decrease was attributed to a $136 million, or 15%, decrease in cash and cash equivalents and a $69 million, or 7%, decline in investment securities, as liquidity was used to fund $209 million, or 3%, of net loan growth and deposit contraction.

Previous wording

Total liabilities decreased $97 million, or 1%, to $8.36 billion at March 31, 2026 from $8.46 billion at December 31, 2025, driven by combined contraction of $59 million, or less than 1%, for total deposits and SSURA in addition to a $37 million, or 17%, decrease in other liabilities.

Current wording

Total liabilities increased $662 million, or 8%, to $9.12 billion at June 30, 2026 from $8.46 billion at December 31, 2025. Total liabilities of $771 million were assumed on May 1, 2026 as a result of the FM acquisition, including total deposits of $765 million. Excluding the impact of the acquisition, total liabilities decreased $109 million, or 1%, during the first six months of 2026, driven by combined contraction of $80 million, or 1%, for total deposits and SSURA in addition to a $30 million, or 14%, decrease in other liabilities.