Central Bancompany, Inc.

The second quarter and first half of 2026 were characterized by moderate economic growth, with GDP expanding at a 2.6% forecast rate and unemployment remaining stable near 4.3%, supported by continued strength across the Company's Midwest markets. The Federal Reserve held the prime rate at 6.75% at quarter-end, with expectations of gradual easing toward 6.25% over the near-term horizon, while rising intermediate-term market interest rates during the period created both valuation pressure on fixed-rate securities and attractive reinvestment opportunities. Elevated energy prices and geopolitical uncertainty contributed to a cautious business environment, though disruptions remained contained and did not materially affect credit performance across the Company's loan portfolio.

The following table presents selected financials from our income statement and performance ratios.

Key highlights for the three months ended June 30, 2026:

•Net income of $113.8 million, or $0.47 per fully diluted share, compared to $91.4 million and$0.41 for the three months ended June 30, 2025.

•Adjusted net income (non-GAAP)1 of $113.3 million, or $0.47 per fully diluted share, compared to $97.9 million and $0.44 for the three months ended June 30, 2025.

•ROAA of 2.24% compared to ROAA of 1.90% in the prior year quarter.

•Efficiency ratio of 46.5%; Adjusted efficiency ratio 1, 2 of 46.1%, compared to 51.7% and 48.4% respectively, in the prior year quarter.

Key highlights for the six months ended June 30, 2026:

•Net income of $224.9 million, or $0.94 per fully diluted share, compared to $186.2 million and $0.84 for the six months ended June 30, 2025.

•Adjusted net income (non-GAAP)1 of $224.4 million, or $0.93 per fully diluted share, compared to $192.6 million and $0.87 for the six months ended June 30, 2025

•ROAA of 2.22% compared to ROAA of 1.95% in the prior year

•Efficiency ratio of 46.4%; Adjusted efficiency ratio 1, 2 of 45.9%, compared to 50.5% and 48.5% respectively, in the prior year

1 These are non-GAAP financial measures we believe are helpful in interpreting our financial results. For more information on non-GAAP measures and for a reconciliation to the most directly comparable GAAP financial measure, see “—Non-GAAP Financial Measures Reconciliations.”

2 Fully-tax equivalent basis.

Net Interest Income and Net Interest Margin

The following table summarizes the distribution of average balances, average yields and costs (on an annualized basis for interim periods), and changes in net interest income on an FTE basis. Average balances are daily average balances and include nonaccrual loans. The table below includes the effect of deferred fees and expenses, discounts and premiums, as well as purchase accounting adjustments that are amortized or accreted to interest income or expense.

1 Interest income and yields are reported on an FTE basis, using a blended federal and state effective marginal tax rate of 23.84% for all periods. The tax-equivalent interest income and yields give effect to the tax-exempt interest income net of the disallowance of interest expense, for federal income tax purposes related to certain tax-free assets.

2 Loan balances include mortgage loans held for sale and nonaccrual loans of $55.1 million and$46.4 million as of June 30, 2026 and 2025, respectively.

Net interest income increased for both the three and six months ended June 30, 2026, compared to the corresponding periods in 2025, primarily due to growth in average earning assets and expansion of the net interest margin. Average earning assets increased 5.7% and 6.4% for the three and six month periods, respectively, reflecting growth in deposits, retained earnings, and capital generated through our initial public offering.

For the three months ended June 30, 2026, net interest income increased $17.7 million, or 9.1%, to $212.8 million. On an FTE basis, net interest income (non-GAAP) increased 9.0% to $214.4 million. Net interest margin increased 13 bps to 4.40%4.40%, while net interest margin (FTE) (non-GAAP) increased 13 bps to 4.43%.

For the six months ended June 30, 2026, net interest income increased $37.1 million, or 9.6%, to $421.4 million. On an FTE basis, net interest income (non-GAAP) increased 9.6% to $424.8 million. Net interest margin increased 13 bps to 4.36%, while net interest margin (FTE) (non-GAAP) increased 13 bps to 4.39%.

Total interest income increased for both periods, driven by earning asset growth, continued repricing of loans and securities, and deployment of deposit and IPO-related funding into securities. Total interest income increased 6.0% to $260.4 million for the quarter and 6.7% to $518.5 million for the six month period. On an FTE basis (non-GAAP), total interest income increased 6.0% to $262.0 million and 6.7% to $521.9 million, respectively.

Interest expense decreased due primarily to lower rates paid on time deposits, federal funds purchased, and customer repurchase agreements, partially offset by growth in savings and interest-bearing deposits. Interest expense declined $3.0 million, or 5.9%, for the quarter and $4.5 million, or 4.4%, for the six month period compared to the corresponding periods in 2025.

The table below identifies changes related to volumes (average balances) and rates on our net interest income during the period shown, with respect to (i) changes in volume (change in volume times old rate), (ii) changes in rates (change in rate times old volume) and (iii) changes in rate / volume (change in rate times the change in volume, including difference in the number of days). Any change in interest not due solely to volume or rate has been allocated in proportion to the respective absolute dollar amounts of the change in volume or rate.

Provision for Credit Losses

The provision for credit losses, including provision for off-balance sheet credit exposures, was $6.7 million for the six months ended June 30, 2026, compared to $2.9 million for the six months ended June 30, 2025. For the three months ended June 30, 2026, the provision was $3.5 million compared to a net recovery in the prior-year quarter. The lower provision expense in the prior-year quarter was primarily driven by a $5.0 million reserve release associated with the reclassification of the consumer lease portfolio as held for sale in June 2025, which reduced the allowance for credit losses in the Consumer Banking segment. Excluding this, the current-quarter provision decrease compared to the prior-year quarter primarily reflects changes in portfolio composition, including the continued strategic de-emphasis of the indirect consumer lending portfolio.

Noninterest Income

The following table presents noninterest income for the three and six months ended June 30, 2026 and 2025.

Noninterest income was $69.6 million for the three months ended June 30, 2026, an increase of $19.5 million, or 38.9%, compared to $50.1 million for the same period in 2025. Theincrease was primarily driven by continued growth in wealth management services, as discussed below. Current quarter results also included $8.4 million of gains recognized on holdings of Visa B shares, partially offset by a $7.8 million loss related to the selective repositioning of certain investment securities to capitalize on attractive market opportunities. In addition, results for thesecond quarter of 2025 were reduced by a $13.6 million loss associated with the sale of the consumer lease portfolio, which was recorded in other income.

For the six months ended June 30, 2026, noninterest income was $134.6 million, an increase of $25.8 million, or 23.7%, compared to $108.9 million for the same period in 2025. The increase primarily reflected growth in wealth management services, driven by continued strong growth in assets under advice. Results for the first six months of 2026 also benefited from the Visa B share gains, while the prior-year period was impacted by the $13.6 million consumer lease portfolio loss. These factors were partially offset by the $7.8 million loss recognized on the repositioning of investment securities during the second quarter of 2026.

Wealth management services. Wealth management services consists of brokerage services and fiduciary service fees earned from trust asset management and investment advisory services. For the three months ended June 30, 2026, wealth management services increased $3.9 million, or 20.3%, to $23.2 million compared to the same period in 2025. For the six months ended June 30, 2026, wealth management services increased $7.0 million, or 18.2%, to $45.5 million compared to the same period in 2025. The increases were primarily driven by higher average assets under advice resulting from favorable market performance during both the quarterly and year to date periods. The year to date increase also reflected the benefit of new assets under advice and favorable net client fee growth. Assets under advice grew $3.0 billion from June 2025, or 21.3%, to $17.3 billion at June 30, 2026.

Other income. Other income includes bank owned life insurance income, check commission, gain on sale of assets, and other miscellaneous income items. Other income was $2.0 million for the three months ended June 30, 2026, compared to the loss of $12.0 million in the prior year quarter. For the six months ended June 30, 2026, other income was $4.6 million, compared to a loss of $11.1 million for the same period in 2025. The year-over-year increases were primarily attributable to the $13.6 million loss recognized in June 2025 on the sale of the consumer lease portfolio.

1 This is a non-GAAP financial measures we believe are helpful in interpreting our financial results. For more information on non-GAAP measures and for a reconciliation to the most directly comparable GAAP financial measure, see “—Non-GAAP Financial Measures Reconciliations.”

Noninterest Expense

The following table presents the major componentsof our noninterest expense for the three and six months ended June 30, 2026 and 2025:

Total noninterest expense was $131.4 million for the three months ended June 30, 2026, an increase of $4.6 million, or 3.6%, compared to $126.8 million for the prior year quarter. The increase was primarily due to increases in salaries and employee benefits and net occupancy and equipment, partially offset by a reduction in other expenses. For the six months ended June 30, 2026, total noninterest expense was $258.0 million, an increase of $8.9 million, or 3.6% compared to the same period in 2025. In addition to the categories noted above, the six month period increase was also driven by an increase in legal and professional fees, and bankcard processing, rewards, and related costs.

Salaries and Employee Benefits. Salaries and employee benefits increased $5.3 million, or 7.1%, to $80.0 million when comparing the second quarter of 2026 to the prior year quarter. These expenses were $156.1 million for the first six months of 2026, an increase of $10.1 million, or 6.9%, compared to $146.0 millionfor the same period in 2025. For both the three and six month ended reporting periods, this increase was primarily the result of merit and other salary increases and higher compensation costs associated with elevated performance levels, while staffing levels remained generally consistent with the prior periods.

Net Occupancy and Equipment. Net occupancy and equipment increased $0.7 million, or 6.2% to$12.4 million for the first three months ended June 30, 2026, compared to the same period in 2025. Net occupancy and equipment was$24.6 million for the firstsix months of 2026, an increase of$1.0 million, or 4.5%, compared to$23.5 million for the same period in 2025. This increase was primarily the result of continued investment in our branch network, with the opening of four new full-service branches since June 2025.

Legal and Professional Fees. Legal and professional fees were$11.6 million for the first six months of 2026, an increase of$1.3 million, or 12.3%, compared to$10.4 million for the same period in 2025, primarily reflecting higher costs related to technology improvement initiatives and additional costs associated with being a public company, such as auditing and insurance costs.

Bankcard Processing, Rewards and Related Costs. Bankcard processing, rewards and related costs increased$0.9 million, or 6.0% for the first six months of 2026, compared to the same period in 2025, primarily reflecting $0.4 million in credit card rebates received in the first quarter of 2025 that did not recur in 2026, as well as an increase in card transaction volume.

Other Expenses. For the three months ended June 30, 2026, other expenses decreased $1.8 million to $14.3 million, compared to the same period in 2025. Other expenses decreased $4.0 million, to $28.4 million for the first six months of 2026, compared to the same period in 2025. Thedecrease was primarily due to$1.9 million higher residual loss expense in thesecond quarter of 2025, and a$4.9 million higher residual loss for the first six months of 2025, on the consumer lease portfolio as a resultof declining fair market values. The reduction in expenses coincided with the sale of this portfolio. This was partially offset by increases in various other expense categories.

Income Taxes

The provision for income taxes varies due to the amount of taxable income, the investments in tax-advantaged securities and loans, tax credits and the rates charged by federal and state authorities where we do business. Income tax expense was $33.7 million for the three months ended June 30, 2026, representing an effective tax rate of 22.8%, compared to $27.0 million and an effective tax rate of 22.8%, for the same period in 2025. For the first six months of 2026, income tax expense was $66.5 million, compared to $55.1 million for the same period in 2025. Both periods had an effective tax rate of 22.8%. The increase in income tax expense was driven by higher pre-tax income year over year.

Discussion and Analysis of Business Segments

The Company has aligned its operations into the following three reportable segments: Consumer Banking, Commercial Banking and Wealth Management (collectively, the “Business Segments”). The Chief Executive Officer regularly evaluates Business Segment financial results produced by the Company’s internal reporting system in deciding how to allocate resources and assess performance for individual Business Segments. The management accounting system assigns balance sheet and income statement items to each Business Segment using methodologies that are refined on an ongoing basis. See "Note 12, Business Segment Reporting," to our consolidated financial statements in this Quarterly Report on Form 10-Q.

Consumer Banking Operating Results

For the three months ended June 30, 2026, Consumer Banking net income increased $10.0 million, or 35.0%, to $38.5 million compared to the same period in 2025. The increase was primarily due the expected sale of the consumer lease portfolio in June 2025, which resulted in a $13.6 million loss. This was partially offset by the $5 million release of the provision that increased Consumer Banking net income during 2025.

Commercial Banking Operating Results

For the three months ended June 30, 2026, Commercial Banking net income increased $2.5 million, or 4.2%, to $63.6 million compared to the same period in 2025. The increase was primarily due to increased net interest income of 4.8% driven by an increase in the FTP paid on deposits.

Wealth Management Operating Results

For the three months ended June 30, 2026, Wealth Management net income increased $1.7 million, or 40.0%, to $6.1 million compared to the same period in 2025, as assets under advice increased. The 21.3% rise in total AUA was driven by continued strong net new AUA, which grew $3.0 billion from June 2025, to $17.3 billion at June 30, 2026.

Consumer Banking Operating Results

For the six months ended June 30, 2026, Consumer Banking net income increased $14.7 million, or 24.4%, to $75.1 million compared to the same period in 2025. The increase was primarily driven by growth in net interest income of $11.6 million, or 7.5%, and a $17.9 million improvement in noninterest income largely reflecting the absence of the $13.6 million consumer lease portfolio loss recognized in the second quarter of 2025. These increases were partially offset by a $5 million increase in provision expense, resulting from the expected sale of the consumer leasing portfolio in June 2025.

Commercial Banking Operating Results

For the six months ended June 30, 2026, Commercial Banking net income increased $7.8 million, or 6.5%, to $127.6 million compared to the same period in 2025. The increase was primarily due to increased net interest income of 5.6% driven by an increase in the FTP paid on deposits.

Wealth Management Operating Results

For the six months ended June 30, 2026, Wealth Management net income increased $3.2 million, or 36.9%, to $12.0 million compared to the same period in 2025. The increase was driven by noninterest income growth of $6.6 million, or 17.9%, reflecting continued strong growth in assets under advice, which increased $3.0 billion, or 21.3%, to $17.3 billion at June 30, 2026, driven by strong net new asset inflows partially offset by market movement.

Financial Condition and Risk Management

The following discussion provides an overview of the Company’s financial condition, asset quality, liquidity position, and regulatory capital as of June 30, 2026, with comparisons to the prior year quarter where relevant. This analysis highlights the key drivers of balance sheet changes, evaluates trends in credit performance, and outlines the strength of the Company’s liquidity and capital resources. Together, these measures reflect management’s ongoing focus on prudent risk management, disciplined balance sheet strategy, and maintaining a strong financial foundation to support continued operations and future growth.

As of June 30, 2026:

•Total assets decreased 2.2% to $20.3 billion as of June 30, 2026 from $20.8 billion as of December 31, 2025, reflecting a net decline in deposits. This is driven by the expected outflow of seasonal deposits, primarily public funds.

•Total loans held for investment as of June 30, 2026 totaled $11.7 billion, an increase of $239 million, or 2.1%, compared to $11.4 billion as of December 31, 2025. The increase was primarily due to increases in commercial real estate and residential mortgage loans, partially offset by a decline in other consumer loans.

•Investment securities grew $650 million, an increase of 10.1% from December 31, 2025. Growth was driven by the strategic repositioning of excess liquidity into higher-yielding investment securities as IORB rates declined over the previous two years, and reduced returns on excess Federal Reserve balances. During the period, the Company repositioned approximately $210 million of securities yielding 2.0% into approximately $202 million of securities yielding 4.5% and extended effective duration of those securities from 1.7 years to 3.3 years.

•Total deposits decreased $484.8 million, or 3.1%, to $15.4 billion as of June 30, 2026 from $15.9 billion as of December 31, 2025. The decrease was primarily driven by the expected outflow of seasonal deposits, primarily public funds. Noninterest-bearing demand deposits remained relatively stable, comprising 36.2% of total deposits at June 30, 2026, compared to 35.4% at December 31, 2025, reflecting the continued strength of our core deposit franchise.

•Total stockholders' equity grew by $82 million, an increase of 2.2% from December 31, 2025. The growth is primarily due to earnings retention less stock repurchases of$39.2 million, including shares acquired to satisfy tax withholding obligations associated with equity compensation plans.

The Company manages risk through an enterprise risk management framework that establishes risk appetite, governance structures, and monitoring processes across key risk categories, including credit, market, liquidity, operational, and technology risks. Risk is overseen by the Board of Directors and its committees, with management responsible for identifying, measuring, monitoring, and controlling exposures through established limits, key risk indicators, and escalation protocols.

Credit Risk Management

Credit risk is the risk that borrowers or counterparties will be unable or unwilling to repay their obligations in accordance with the underlying contractual terms. We seek to mitigate credit risk in our loan and lease portfolio by following clearly defined underwriting criteria and account management standards set by management. See "Note 3, Loans and Allowance for Credit Losses," to our consolidated financial statements in this Quarterly Report on Form 10-Q.

Our objective is to maintain a high degree of credit quality, support the customers and communities we serve, and achieve our objectives for profitability and liquidity. Maintaining strong credit quality is essential to the viability of our business model. Through our business activities we recognize and seek to mitigate three primary types of credit risk: default risk, concentration risk and systemic risk. Managing credit risk is a continuous, enterprise-wide initiative that starts with our local market bankers and leaders as our first line of defense. We leverage the strength of our bankers across markets to manage and limit risk taking complemented by our comprehensive credit policy and underwriting standards. To help ensure we balance market-level support while maintaining a diversified portfolio, we impose market-level approval limits and industry, asset and geographic limits.

To manage and enforce our portfolio metrics and diversification targets our credit management committee meets periodically to evaluate credit risk migration, new business activities, stress-test results and evaluate credit policy changes and approve or modify market lending authorities. Our internal loan review department, our third line of defense, serves as an independent function to evaluate effective underwriting and application of credit policy in both origination and portfolio management.

Loan and Lease Portfolio

We offer a broad range of lending products with a focus on commercial real estate, construction and development, commercial and industrial, multi-family and one-to-four-family residential loans in our Primary Markets in Missouri, Kansas, Oklahoma and Colorado. We deliver these products through a local, relationship-based delivery model emphasizing market-level credit authority.

The following table presents our loan and lease portfolio by category as of June 30, 2026 and December 31, 2025:

Credit quality across the loan portfolio remains strong, reflecting our commitment to conservative underwriting standards. Portfolio‑level metrics across all loan classes continue to align with these established standards, underscoring the stability and resilience of the credit profile. Total loans held for investment increased $239 million, or 2.1%, to $11.7 billion as of June 30, 2026. The increase was primarily due to an increase in commercial real estate and residential real estate, partially offset by a decline in the consumer loan portfolio.

Commercial loans totaled $7.2 billion at June 30, 2026, representing an increase of $152 million, or 2.2%, compared to December 31, 2025. Growth during the first six months of 2026 was primarily driven by non-owner occupied commercial real estate, which increased $99 million, and commercial, financial, and agricultural loans, which grew $38 million, reflecting continued strong business banking activity across our primary markets. Owner-occupied commercial real estate increased $16 million, while construction and development loans were essentially flat, consistent with normal project completion activity.

Residential and consumer loans totaled $4.5 billion at June 30, 2026, an increase of $88 million, or 2.0%, compared with December 31, 2025. Growth was driven primarily by increases in residential mortgage loans of $154 million, or 4.6%, reflecting strong demand for adjustable-rate mortgage products and residential construction financing, as well as a $22 million, or 5.5%, increase in home equity lines of credit. These increases were partially offset by an $89 million decline in other consumer loans, primarily attributable to the completion of the consumer lease portfolio sale and the continued strategic, de-emphasis of indirect consumer lending. The change in portfolio composition reflects the Company's strategic focus on expanding residential real estate lending while reducing exposure to selected consumer lending segments. Credit quality within the residential mortgage portfolio remained strong at June 30, 2026, supported by an average loan‑to‑value ratio, calculated based on original property valuation, of 59%, an average debt‑to‑income ratio, calculated at loan origination of 38.9%, and an average FICO score, measured at loan origination, of 728.

Asset Quality

The following table presents selected financials from our consolidated balance sheet and the asset quality ratios discussed below.

Loans are analyzed for risk rating updates as part of the annual credit review process. For larger loans, rating assessments may be more frequent if relevant information is obtained earlier through debt covenants or overall relationship management. Smaller loans are monitored as identified by the loan officer based on the risk profile of the individual borrower or if the loan becomes past due related to credit issues. Loans rated “Watch,” “Substandard” or “Nonaccrual” under our internal risk grading system (as described below) may be subject to more frequent review and monitoring processes. In addition to the regular monitoring performed by the market lending personnel and credit committees, loans are subject to review by our internal loan review department, which verifies the appropriateness of the risk ratings for the loans chosen as part of its risk-based review plan.

Net charge-offs

As illustrated in the chart below, net charge-offs remained low relative to average loans and improved from the levels reported in the comparable 2025 periods.

Net charge-offs totaled $5.9 million for the six months ended June 30, 2026, compared to $7.8 million for the same period in 2025. For the three months ended June 30, 2026, net charge-offs were $3.0 million, compared to $4.3 million in the prior year quarter. Annualized net charge-offs represented 0.10% of average total loans for the quarter, compared to 0.15% in the prior year period. Despite the increase in provision expense during the period, net charge-off levels remained low, reflecting the continued strength of the Company's credit quality.

Nonperforming Loans and Assets

Our non-performing assets consist of nonperforming loans and foreclosed real estate, if any. Our nonperforming loans consist of loans past due 90 days or more and still accruing and nonaccrual loans. We consider loans past due on the day following the contractual repayment date if the contractual repayment was not received by us as of the end of the business day. Loans for which the accrual of interest has been discontinued are designated as nonaccrual loans. The accrual of interest on loans is discontinued when, in management’s judgment, the interest is uncollectible in the normal course of business. Loans are placed on nonaccrual status when (i) deterioration in the financial condition of the borrower exists such that collection of full principal and interest is not expected, or (ii) principal or interest is 90 days or more past due, unless the loan is both well secured and in the process of collection. When a loan is placed on nonaccrual status, any interest previously accrued but not collected is reversed against current income, and the loan is charged off to the extent uncollectible. Principal and interest payments received on nonaccrual loans are generally applied to principal. Interest is included in income only after all previous loan charge-offs have been recovered and is recorded only as received. The loan is returned to accrual status only when the borrower has brought all past-due principal and interest payments current and, in the opinion of management, has demonstrated the ability to make future payments of principal and interest as scheduled.

The following table presents our nonperforming loans and assets for the dates indicated:

Nonaccrual loans totaled $55.1 million as of June 30, 2026, an increase of $10.5 million, or 23.4%, from $44.7 million at December 31, 2025. The increase was concentrated in the commercial portfolio and reflected the migration of a limited number of borrower relationships to nonaccrual status during the first half of 2026. Higher nonaccrual balances in non-owner-occupied commercial real estate and commercial, financial, and agricultural loans accounted for most of the increase, rising $7.1 million and $4.6 million, respectively. The deterioration was isolated to a few borrower-specific commercial credits that are being actively managed toward resolution and did not reflect a broader weakening in portfolio credit quality. Residential mortgage nonaccruals declined modestly during the period, reflecting continued stability in the consumer portfolio. Despite the increase in nonaccrual loans, overall asset quality remained favorable, with nonperforming loans representing 0.49% of loans held for investment at June 30, 2026.

Allowance for Credit Losses

The allowance for credit losses represents management's estimate of expected credit losses within the loan and lease portfolio. Determining the allowance requires elements of judgment and involves consideration of historical loss experience, current economic conditions, and reasonable and supportable forecasts. For additional information regarding the allowance methodology, see "Critical Accounting Policies and Estimates—Allowance for Credit Losses on Loans" in this Quarterly Report on Form 10-Q.

The allowance is measured primarily on a collective basis using an average historical loss methodology. Loans are pooled based on shared risk characteristics, including borrower and collateral type, while loans that do not share similar risk characteristics, primarily certain larger nonaccrual loans, are evaluated individually.

At June 30, 2026, the allowance for credit losses was $150.4 million, or 1.29% of total loans and leases, compared to $149.4 million, or 1.31%, at December 31, 2025. The ratio of the allowance for credit losses to nonperforming loans decreased to 263% at June 30, 2026, from 325% at December 31, 2025, primarily due to higher nonperforming loan balances during the first six months of 2026. While nonperforming loans increased during the period, management believes the related credit stress remains limited to a small number of commercial relationships and does not reflect broad-based deterioration in portfolio quality. Based on current portfolio composition, credit performance, economic conditions, and the continued low level of net charge-offs, management believes the allowance for credit losses remains adequate. The Company continues to closely monitor watch list and substandard-rated credits, particularly within the non-owner-occupied commercial real estate and commercial, financial, and agricultural loan portfolios, and will adjust the allowance as warranted by changes in borrower performance or economic conditions.

The following tables present theallocation of the allowance for credit losses by loan category:

Management evaluates the adequacy of the allowance for credit losses on a quarterly basis using the best information available at the time of the assessment. Because the allowance is based on estimates and assumptions regarding borrower performance, economic conditions, and other factors, future adjustments may be necessary as those conditions change.

Market Risk

Interest Rate Risk

Interest rate risk is one of the most significant risks faced by the Company as one of our primary sources of earnings is net interest income, the difference between interest income earned on interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits and borrowings.

The Company’s Asset Liability Management Committee ("ALCO"), operating under authority granted by the Board of Directors, is responsible for measuring, monitoring, and managing interest rate risk to limit earnings volatility and protect capital and liquidity.

Investment Securities

As part of our broader risk management framework, the investment portfolio serves as a key tool for balancing interest rate exposure, preserving capital, and ensuring adequate liquidity under a range of market conditions. Ongoing monitoring of portfolio composition, valuation trends, and duration sensitivity allows us to assess how shifts in the rate environment or market dynamics may influence both earnings and economic value.

As of June 30, 2026, the amortized cost of our AFS and HTM investment portfolios totaled $7.1 billion, an increase of $710 million, or 11.1% versus December 31, 2025. The combined fair value of these portfolios totaled $7.0 billion as of June 30, 2026, an increase of $644 million, or 10.1%, from December 31, 2025.

During the second quarter of 2026, the Company redeployed a portion of its excess liquidity held at the Federal Reserve into investment securities, primarily U.S. Treasury, agency CMBS, and agency RMBS securities. The Company also repositioned approximately $210 million of available-for-sale securities with a 2.0% book yield and 1.7-year effective duration into approximately $202 million of securities with a 4.5% book yield and 3.3-year effective duration, recognizing net losses of $7.8 million. Management expects the resulting increase in interest income to recover the recognized losses within approximately two years and improve earnings performance across a range of interest rate environments

The portfolio's average tax-equivalent yield was 4.13% at June 30, 2026, an increase of 9 bps compared to December 31, 2025. Gross unrealized gains totaled $12.4 million and $57.2 million at June 30, 2026 and December 31, 2025, respectively, while gross unrealized losses totaled $125.6 million and $104.6 million, respectively. The decline in net unrealized valuation was driven primarily to higher market interest rates during the first six months of 2026, which negatively affected the fair value of longer duration securities.

As of June 30, 2026, the portfolio’s composition was 37% agency residential mortgage-backed securities (“RMBS”), 42% agency commercial mortgage-backed securities (“CMBS”), and 17% Treasuries, with the balance in the Small Business Administration (“SBA”), municipal, corporate and other securities.

A primary risk of holding agency RMBS comes from the variability in principal cashflows that may occur as interest rates change. In general, when interest rates rise, the prepayment of principal slows down, extending the amount of time it takes to recover and reinvest that principal. In contrast, when interest rates fall, the prepayment of principal generally increases, shortening the amount it takes to recover and reinvest that principal. We evaluate this risk through pre-purchase modeling of potential cashflows as well as continuous modeling throughout the life of the securities.

As of June 30, 2026, our best estimate of the duration of our $2.6 billion residential mortgage-backed securities portfolio held in available-for-sale was 3.3 years. As of June 30, 2026, management estimates the effective duration extends by 0.7 years assuming an immediate 200 basis point upward shock and contracts by 0.9 years assuming an immediate 200 basis point downward shock. As of the same date, our best estimate of the duration of the total investment portfolio excluding equity securities was 2.7 years. Management estimates the effective duration extends by 0.3 years assuming an immediate 200 basis point upward shock and contracts by 0.3 years assuming an immediate 200 basis point downward shock.

All securities not issued or guaranteed by the U.S. government, its agencies, or sponsored enterprises are subject to a quarterly review to test for impairment. This process is intended to adequately test for a range of credit and loss assumptions and does not rely primarily on credit ratings. This review was performed as of June 30, 2026 and December 31, 2025 and revealed no matters that would warrant impairment and result in an allowance for credit losses. The Company determined that all unrealized losses are primarily attributable to changes in interest rates and current market conditions.

Sensitivity to Interest Rates

We utilize an asset/liability simulation model to evaluate the sensitivity of net interest income (short-term risk) and economic value of equity (“EVE”) (long-term risk) to changes in interest rates under various hypothetical scenarios. EVE represents the estimated present value of assets less liabilities at a point in time. Changes in EVE indicate the potential impact on the long-term earnings capacity of the balance sheet assuming rate changes remain in effect.

The table below presents the estimated impact on net interest income and EVE from immediate parallel changes in interest rates as of June 30, 2026. The Company maintained a modestly asset-sensitive interest rate risk profile at quarter-end, with net interest income and EVE responding positively to rising rate scenarios and negatively to declining rate scenarios. The strategic redeployment of excess Federal Reserve cash balances into intermediate-duration investment securities and the selective portfolio repositioning executed during the second quarter reduced the Company's overall asset sensitivity compared to prior periods.

The values in the table above are hypothetical and do not reflect potential management actions that could mitigate the effects of interest rate changes, including changes in pricing, balance sheet mix, or funding strategies. Actual results may differ due to variations in the timing and magnitude of interest rate movements, non-parallel yield curve changes, deposit behavior, loan prepayment speeds, or changes in asset and liability composition or growth. The simulations assume no balance sheet growth or additional rate changes beyond the initial shock and are intended to indicate sensitivity to interest rate changes rather than predict actual results. For further discussion of our interest rate risk, see the "Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk - Interest Rate Risk" included in our 2025 Annual Report on Form 10-K.

Liquidity Risk

We have maintained a strong liquidity position throughout the first six months of 2026, with total readily available liquidity increasing to $6.8 billion at June 30, 2026 from $6.7 billion at December 31, 2025, representing 34% of total assets. We continue to fund our balance sheet primarily through a stable core deposit base, with a loan-to-deposit ratio of 76% and no FHLB advances or other wholesale borrowings outstanding at quarter-end. The following discussion addresses liquidity at both the Bank and holding company levels.

Bank Liquidity

The objective of our liquidity management strategy is to ensure the availability of cash sufficient to fund our operations and meet present and future financial obligations at a reasonable cost. We consider the effective and prudent management of liquidity to be fundamental to our health and strength.

Our ALCO, which has been authorized by the Board, oversees our liquidity risk to confirm that our activities comply with our funds management policy, which specifies overall objectives, metrics, limits, guidelines, reporting requirements and our contingency funding plan, which includes requirements for liquidity stress testing. The ALCO receives regular comprehensive reporting that includes information describing current levels vs. guidelines and limits for a broad set of liquidity metrics, loan and deposit trends, readily available liquidity measures, explanatory commentary relating to changes in our liquidity position and emerging risk trends and, as appropriate, recommended remedial strategies.

Our objective is to maintain prudent levels of current and contingent liquidity from stable sources that can be accessed in a timely manner at a reasonable cost, without significant adverse consequences. We seek to accomplish this mission by funding loans primarily with stable deposits, controlling dependence on wholesale funding, and by maintaining ample readily available liquidity. While our primary source of long-term, stable, and lower-cost funding is deposits, additional sources of funding include, but are not limited to, customer repurchase agreements, federal funds purchased from correspondent banks, unencumbered investment securities, and wholesale funding sources such as FHLB borrowings, dealer repurchase agreements, and wholesale/brokered deposits.

As of June 30, 2026, we had approximately $6.8 billion in readily available liquidity compared to $6.7 billion as of December 31, 2025.

The following table presents selected financials from our consolidated balance sheet and liquidity ratios discussed below.

Deposits

Deposits are our primary source of funding and also represent our most significant source of liquidity needs. Deposits are gathered primarily through our full-service branch locations, as well as through online, mobile and ATM channels. Central Bank offers a variety of deposit products including noninterest-bearing demand deposits, interest-bearing demand deposits, savings accounts, and certificates of deposit.

The following table sets forth the distribution of deposit balances as of June 30, 2026 and December 31, 2025:

Total deposits were $15.4 billion as of June 30, 2026, a decrease of $485 million, or 3.1%, from $15.9 billion at December 31, 2025. The decrease was primarily attributable to seasonal declines in public fund deposits, partially offset by growth in commercial deposits. Retail deposit balances remained relatively stable. Noninterest-bearing demand deposits represented 36.2% of total deposits at June 30, 2026, compared with 35.4% at December 31, 2025, reflecting a favorable deposit mix and continued stability in core deposit relationships.

FDIC deposit insurance generally covers up to $250 thousand per depositor for each account ownership category. Our estimated uninsured and uncollateralized deposits (excluding intercompany accounts) were $3.2 billion, or 21.1% of total deposits, at June 30, 2026, compared with $3.4 billion at December 31, 2025. Available liquidity sources totaled approximately $6.8 billion at June 30, 2026, providing coverage in excess of estimated uninsured deposits.

The decline in deposits, together with loan growth of $239 million during the first six months of 2026, resulted in an increase in the loan-to-deposit ratio to 76% at June 30, 2026, from 72% at December 31, 2025.

Federal Funds Purchased and Customer Repurchase Agreements

Federal funds purchased and customer repurchase agreements totaled $0.9 billion and $1.0 billion at June 30, 2026 and December 31, 2025, respectively, which included customer repurchase agreements of $834 million and $946 million at June 30, 2026 and December 31, 2025, respectively. These are short-term borrowings that generally have a one-day maturity. Federal funds purchased increased $13 million, or 19.3%, in the first six months of 2026.

Off-Balance Sheet Arrangements

In the normal course of business, in order to meet the needs of our customers, we are subject to off-balance sheet risk which could potentially impact our financial position. These off-balance sheet arrangements include commitments to fund loans and standby letters of credit. The level of outstanding loan commitments may fluctuate based on macroeconomic conditions and customer demand, and changes in these factors could affect our consolidated balance sheets and liquidity position. See Note 9, “Commitments, Contingencies, and Guarantees” to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.

Holding Company Liquidity

The Company is an independent entity distinct from the Bank and is therefore responsible for managing its own liquidity. Its primary source of funding comes from dividends paid by the Bank. However, there are statutory and regulatory restrictions that limit the Bank’s ability to distribute dividends to the Company.

The Bank may not declare dividends in any calendar year in an amount that would exceed its accumulated retained earnings after giving effect to any unrecognized losses and bad debts without the prior approval of the banking regulators. In addition, dividends paid by the Bank to the Company would be prohibited if they would cause the Bank’s capital to be reduced below applicable minimum capital requirements. During the six months ended June 30, 2026, the Bank paid $200 million in dividends to the Company. As of June 30, 2026, the Bank had approximately$58 million of retained earnings that could be upstreamed to the Company through dividends without prior approval from the Federal Reserve.

The liquidity needs of the Company on an unconsolidated basis consist primarily of operating expenses, taxes, and dividends to stockholders. The Company’s liquidity totaled $2.0 billion as of June 30, 2026, consisting primarily of a $1.0 billion loan to the Bank and $1.0 billion in cash and cash equivalents. The Company’s liquidity totaled $1.9 billion as of December 31, 2025, consisting of a $1.0 billion loan to the Bank, and $897 million in cash and cash equivalents.

The Company’s operating expenses totaled$6.6 million for the six months ended June 30, 2026. Dividends paid to stockholders totaled$57.7 million and the Company repurchased $39.2 million of common stock, including shares acquired to satisfy tax withholding obligations associated with equity compensation plans, during the first six months of 2026.

Operational Risk

Operational risk refers to the risk arising from inadequate or failed internal processes or systems, the misconduct or errors of people or adverse external events, as well as risks related to compliance with laws and regulations, and exposure to legal matters. We seek to mitigate operational risks by expanding and maintaining an experienced operations team to meet customer and company demands; providing employees with relevant job-specific training; working with our vendors to use antifraud protections; establishing security procedures for our clients; employing business continuity planning and testing designed to ensure the continued operation of core functions in the event of a business disruption; and engaging in periodic independent audits of our operations and operating controls. We also seek to mitigate operational risks related to misconduct by employees or contractors by implementing internal controls, including dual authorization for monetary transactions, conducting background and credit checks for new hires, screening contractors and third parties providing critical services using a vendor management process, and offering whistleblower protections to our employees to encourage the reporting of misconduct.

Our operations are dependent on the secure and reliable functioning of our information systems and those of third-party service providers. As a result, cybersecurity threats and fraud-related risks represent an ongoing area of focus for management, particularly as the use of digital platforms and emerging technologies continues to evolve. We maintain a risk-based cybersecurity and fraud risk management program that includes preventative and detective controls, ongoing monitoring, and response protocols designed to safeguard systems and customer information and support business continuity. These risks are considered within our broader risk management framework and are monitored as part of our ongoing assessment of operational and technology-related risks that could impact our financial condition and results of operations. We continue to monitor evolving cybersecurity and fraud risks, including those related to digital activity and artificial intelligence, which did not materially impact results this quarter.

Capital

Our capital management strategy is designed to ensure that we have sufficient capital to support balance sheet growth while also maintaining sufficient reserves to absorb unexpected losses or write-downs that are risks inherent to the business of banking. We aim to strike a balance between maintaining higher capital levels to address unforeseen risks and achieving a reasonable return on the capital invested by our shareholders.

The Bank is required to meet regulatory capital standards set by federal banking authorities. If the Bank fails to meet the minimum capital requirements, it could trigger mandatory actions, and possibly additional discretionary measures, by the state and federal regulators, which may have a significant impact on the Bank’s financial position. The Bank must comply with specific capital guidelines under the capital adequacy rules and the prompt corrective action framework, which involve quantitative measures based on the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting rules. Additionally, regulators assess the Bank’s capital levels and classifications based on qualitative factors such as risk weightings, the components of capital, and other items.

The prompt corrective action (“PCA”) framework is a regulatory tool used to monitor and manage the capital levels of banks. It is designed to maintain the stability and soundness of financial institutions, particularly banks, by requiring regulatory intervention when a bank’s capital falls below certain thresholds. The primary goal of PCA is to address financial distress early, before it results in more severe consequences. These regulations, enforced by federal banking agencies, classify banks based on their capital adequacy and impose escalating supervisory actions as a bank’s capital position deteriorates.

PCA regulations mandate that federal regulators take action when a bank’s capital falls below the required thresholds. This can involve measures such as restrictions on paying dividends or bonuses, restrictions on asset growth or expansion, enhanced monitoring and reporting requirements, required capital restoration plans, possible forced mergers or liquidation in extreme cases.

At each of June 30, 2026 and December 31, 2025 the Company’s capital ratios exceededthe regulatory requirements and the Bank’s capital ratios exceeded the threshold for “well capitalized” status. We maintain excess capital, in part, to provide ourselves with flexibility when considering potential acquisition opportunities. Actual and required capital ratios were:

As of June 30, 2026, we had no material contractual commitments for capital expenditures. However, we are currently progressing through our Core Modernization initiative, which is expected to result in capital expenditures as project phases are executed. To date, we have capitalized $12 million related to this initiative. These expenditures are funded through operating cash flows, and we do not expect the initiative to have a material adverse impact on our liquidity or capital position.

Subsequent to quarter-end, on August 3, 2026, the Board of Directors terminated the 2026 Repurchase Program and approved the Second Repurchase Plan, authorizing the repurchase of up to $100 million of the Company's common stock. At June 30, 2026, approximately $11.3 million remained available under the 2026 Repurchase Program; however, that authorization was rescinded and replaced in its entirety by the Second Repurchase Plan.

Critical Accounting Policies and Estimates

Our consolidated financial statements were prepared in accordance with GAAP and follow general practices within the industry in which we operate. Application of GAAP requires management to make certain estimates and judgments which affect the amounts reported in the consolidated financial statements. Critical accounting policies are those we believe are most important to the portrayal of our consolidated financial statements and require management to make estimates and judgments which are inherently complex, difficult, uncertain and can be subject to significant change over time. In the event that different assumptions or conditions were to prevail, and depending on the severity of such changes, adjustments to accounting estimates may be required.

The estimates and judgments that management believes have the most effect on our reported financial position and results of operations are set forth in “Note 1 – Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Allowance for Credit Losses on Loans

The allowance for credit losses on loans is a valuation amount that is deducted from the amortized cost basis of loans not held at fair value to present the net amount expected to be collected over the contractual term of the loans. The allowance for credit losses on loans is measured using relevant information about past events, including historical credit loss experience on loans with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flow over the contractual term of the loans. An allowance will be created upon origination or acquisition of a loan and is updated at subsequent reporting dates. The methodology is applied consistently for each reporting period and reflects management’s current expectations of credit losses. Changes to the allowance for credit losses on loans resulting from periodic evaluations are recorded through increases or decreases to the credit loss expense for loans, which is recorded in provision for credit losses on the consolidated statements of income. Loans that are deemed to be uncollectible are charged off against the related allowance for credit losses on loans. We maintain a policy to reverse accrued and unpaid interest when a loan is placed on non-accrual. Therefore, an allowance is not recorded for accrued interest.

The allowance for credit losses on loans is measured on a collective (pool) basis. Loans are aggregated into pools based on similar risk characteristics including borrower type, collateral type, and expected credit loss patterns. We maintain a policy to reverse accrued and unpaid interest when a loan is placed on non-accrual. Therefore, an allowance is not recorded for accrued interest. The allowance for credit losses includes significant assumptions that are uncertain and reasonably likely to have a material impact, the most significant of which are loan loss rates and prepayment speeds. Assumptions are updated based on actual performance on an annual basis. We utilize a consensus macroeconomic forecast which relies on underlying statistical models to incorporate the economic impact into each loan portfolio. Management performs a qualitative analysis considering necessary adjustments based on the potential risks inherent in the macroeconomic forecast and impacts from loan portfolio changes, including concentrations, staffing, asset quality, and policy changes. Model validations are performed to provide an independent assessment of the framework and the model’s use in producing reasonable and supportable estimates. See Note 3, “Loans and Allowance for Credit Losses” to our consolidated financial statements contained elsewhere in this Quarterly Report.

Recent Accounting Pronouncements

There have been no material changes in recently issued accounting standards from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Non-GAAP Financial Measures Reconciliations

We provide these measures to supplement our consolidated financial statements prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP) and should not be viewed in isolation from, or as a substitute for, GAAP results. We are presenting these non-GAAP financial measures because we believe, when taken collectively, they may be helpful to investors because they provide consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, results of operations or outlook.

However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. As a result, our non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for our consolidated financial statements presented in accordance with GAAP.

We disclose net interest income and related ratios and analysis on a FTE basis, which may be considered non-GAAP financial measures. We believe this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison of net interest income arising from taxable and tax-exempt sources. In addition, certain performance measures, including the efficiency ratio and net interest margin utilize net interest income on a taxable-equivalent basis. We report interest income, net interest income and net interest margin on an FTE basis using a blended federal and state effective marginal tax rate of 23.84% for the periods presented. The tax equivalent basis gives effect to the tax-exempt interest income, net of the disallowance of interest income, for federal income tax purposes related to certain tax-free assets. We believe these measures enhance comparability of net interest income arising from taxable and tax-exempt sources.

We evaluate our profitability and performance based on adjusted net income, adjusted total revenue, adjusted noninterest income, adjusted fee income and adjusted return on average total assets. We make these adjustments to exclude items that management believes are noncore and not indicative of our underlying operating performance. We've adjusted these measures to exclude the loss on the expected sale of the consumer loan portfolio in one of our markets and adjustments that resulted from certain investment portfolio repositioning activities during the periods presented that we consider to be outside of the ordinary course of business. We believe this allows investors to assess our net income, total revenue and noninterest income exclusive of the impact of changes outside the ordinary course of business. Similarly, we evaluate our operational efficiency based on tangible noninterest expense and our adjusted efficiency ratio, which excludes the effect of amortization of intangibles (a non-cash expense item) as well as the exclusions mentioned previously in this paragraph, and includes the tax benefit associated with our tax-advantaged loans.

We evaluate our financial condition based on the ratios of our tangible common equity to our tangible assets, tangible book value per share, return and adjusted return on average common equity, and return and adjusted return on average tangible common equity. Our calculation of these ratios allows readers to assess our stockholder’s equity, exclusive of the effect of our goodwill and other intangible assets.

Reconciliations for each of these non-GAAP financial measures to the closest GAAP financial measures are included in the tables below. Each of the non-GAAP financial measures presented should be considered in context with our GAAP financial results included in this filing.