What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-08 compared with 2025-05-09 · 363 added, 146 removed, 634 unchanged (45% of the section changed)

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costs or difficulties associated with newly developed or acquired operations;

changes in general economic, political, or market trends (either nationally or locally in the areas in which we conduct, or will conduct, business), including inflation, changes in interest rates, market volatility and monetary fluctuations, and changes in federal government policies and practices, as well as the impact from recently announced and future tariffs on the markets we serve;

changes in general economic, political, or market trends (either nationally or locally in the areas in which we conduct, or will conduct, business), including inflation, changes in interest rates, market volatility and monetary fluctuations, and changes in federal government policies and practices, including with respect to spending on industries concentrated in our market area, as well as the impact from recently announced and future tariffs on the markets we serve;

increased competition;

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the impact, extent and timing of technological changes;

the effects of any cybersecurity breaches;

the effects of any cybersecurity breaches or events;

and the other factors discussed in the “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” section of the Company's Annual Report on Form 10–K for the year ended December 31, 2024 and in Part I, Item 2.

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In order to maintain its operations and branch locations, the Bank incurs various operating expenses which are further described within the “Results of Operations” later in this section.

As of March 31, 2025, we had total consolidated assets of $7.8 billion, gross loans of $5.6 billion, total deposits of $6.5 billion, and total shareholders’ equity of $758.0 million.

As of March 31, 2025, we had 814 full-time employees.

As of June 30, 2025, we had total consolidated assets of $8.1 billion, gross loans of $5.6 billion, total deposits of $6.4 billion, and total shareholders’ equity of $780.0 million.

As of June 30, 2025, we had 819 full-time employees.

None of our employees are covered by a collective bargaining agreement.

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To prepare financial statements in conformity with GAAP, management makes estimates, assumptions, and judgments based on available information.

These estimates, assumptions, and judgments affect the amounts reported in the financial statements and accompanying notes and are based on information available as of the date of the financial statements, and, as this information changes, actual results could differ from the estimates, assumptions, and judgments reflected in the financial statements.

In particular, management has

identified several accounting policies that, due to the estimates, assumptions, and judgments inherent in those policies, are critical in understanding our financial statements.

differ from the estimates, assumptions, and judgments reflected in the financial statements.

In particular, management has identified several accounting policies that, due to the estimates, assumptions, and judgments inherent in those policies, are critical in understanding our financial statements.

Our most significant accounting policies are presented in the notes to the accompanying consolidated financial statements.

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Historical credit loss experience provides the basis for the estimation of expected credit losses;

adjustments to historical loss information are made for differences in current loan-specific risk characteristics, such as differences in underwriting standards, portfolio mix, and delinquency levels, as well as for changes in environmental conditions, such as changes in unemployment rates, property

values, or other relevant factors.

adjustments to historical loss information are made for differences in current loan-specific risk characteristics, such as differences in underwriting standards, portfolio mix, and

delinquency levels, as well as for changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors.

The model methodology used for funded credits, along with taking into consideration the probability of drawdowns or funding on unfunded commitments and whether such commitments are irrevocable or not by the Company, is how the Company determines the allowance for credit losses for unfunded commitments.

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and (iii) underwriting and delinquency trends.

The qualitative factors applied at March 31, 2025, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management’s assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of ACL calculated by the model.

The qualitative factors applied at June 30, 2025, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management’s assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of ACL calculated by the model.

Management reviews supplemental data sources including historical net charge-off rates and data measuring other specific credit outcomes from its systems of record in supporting qualitative factors.

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See Note 8 — Income Taxes, in Notes to the December 31, 2024, Consolidated Financial Statements of the Company for additional information.

On July 4, 2025, the President signed H.R.

1, the “One Big Beautiful Bill Act,” into law.

The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense.

The Company is currently evaluating the impact on future periods.

Non-GAAP Financial Measures

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Additionally, recent reductions, and possible further reductions, in the federal workforce, combined with general economic uncertainty as a result of federal trade and other policies could continue to challenge the economy and impact the CRE sector.

The Bank’s exposure to CRE at March 31, 2025, was $2.8 billion, or 49.7%, of its gross loan portfolio, not including owner-occupied commercial real estate and acquisition, construction & development.

Commercial real estate as a percent of total assets at March 31, 2025, was 35.8%, not including owner-occupied commercial real estate and acquisition, construction & development.

Including owner-occupied commercial real estate and acquisition, construction & development, total exposure was at $3.7 billion, or 65.8%, of our total gross loans and 47.4% of total assets at March 31, 2025.

Loan balances by portfolio segment amortized cost (in thousands) and by percentage of our total gross loan portfolio at March 31, 2025, were as follows:

March 31, 2025

The Bank’s exposure to CRE at June 30, 2025, was $2.8 billion, or 49.5%, of its gross loan portfolio, not including owner-occupied commercial real estate and acquisition, construction & development.

Commercial real estate as a percent of total assets at June 30, 2025, was 34.4%, not including owner-occupied commercial real estate and acquisition, construction & development.

Including owner-occupied commercial real estate and acquisition, construction & development, total exposure was at $3.7 billion, or 66.8%, of our total gross loans and 46.4% of total assets at June 30, 2025.

Loan balances by portfolio segment amortized cost (in thousands) and by percentage of our total gross loan portfolio at June 30, 2025, were as follows:

June 30, 2025

Amortized Cost Percentage

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These reports provide an assessment of asset quality and risk rating migration and monitor concentrations against the board approved concentration limits (including sub-limits).

The tables below present the Bank’s commercial real estate, owner-occupied commercial real estate, and acquisition, construction & development portfolios by collateral type and geographic location as of March 31, 2025 (in thousands).

Commercial Real Estate by Collateral Type and Geographic Location

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CRE loans are monitored through various processes that include payment monitoring, financial reporting, and covenant compliance monitoring, and annual reviews for larger relationships.

Furthermore, construction loans are monitored throughout the life of the project and the construction loan administration function is centralized within the Credit Risk Management team.

Furthermore, construction loans are monitored

throughout the life of the project and the construction loan administration function is centralized within the Credit Risk Management team.

Monitoring the market conditions is also an important component of prudent CRE risk management.

Quarterly construction progress reviews are also completed on acquisition, construction & development loans.

loan, management reviews the adequacy of the construction budget, adequacy of the interest reserve, pace of construction, and review of any loan covenants.

For each loan, management reviews the adequacy of the construction budget, adequacy of the interest reserve, pace of construction, and review of any loan covenants.

The Bank believes its underwriting and monitoring standards for commercial real estate loans are sufficient to evaluate its loan portfolio and keep it from incurring significant losses.

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Management believes that the current sources of liquidity are adequate to meet the Company’s requirements and plans for continued growth.

See Note 6 - Borrowed Funds and Note 10 - Commitments and Contingencies , in Notes to Consolidated

Financial Statements for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.

See Note 6 - Borrowed Funds and Note 10 - Commitments and Contingencies , in Notes to Consolidated Financial Statements for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies.

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A depository institution that is not “well capitalized” is generally prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market, may be subject to asset growth limitations, and may be required to submit capital restoration plans.

As of March 31, 2025, and December 31, 2024, the Bank complied with all regulatory capital standards and qualifies as “well capitalized.” Note 8 - Regulatory Capital Matters in Notes to Consolidated Financial Statements contains additional discussion and analysis regarding the Company and the Bank’s regulatory capital requirements.

As of June 30, 2025, and December 31, 2024, the Bank complied with all regulatory capital standards and qualifies as “well capitalized.” Note 8 - Regulatory Capital Matters in Notes to Consolidated Financial Statements contains additional discussion and analysis regarding the Company and the Bank’s regulatory capital requirements.

Effects of Inflation

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We face a variety of risks that may impact various aspects of our financial performance from time to time.

The extent of such impacts may vary depending on factors such as the current business and economic conditions, political and regulatory environment, and operational challenges.

Many of these risks and our risk management strategies are described in more

detail elsewhere in this Report as well as with the audited consolidated financial statements and notes for the year ended December 31, 2024, included in our Form 10-K.

The extent of such impacts may vary depending on factors such as the current business and economic conditions, political and regulatory

environment, and operational challenges.

Many of these risks and our risk management strategies are described in more detail elsewhere in this Report as well as with the audited consolidated financial statements and notes for the year ended December 31, 2024, included in our Form 10-K.

Our success will depend upon, among other things, the following factors that we manage or control:

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• Management of credit risk and interest rate risk in our portfolio,

• Our ability to continue to attract customers and compete with other banks and financial services providers in our markets,

• Our ability to manage and implement strategic business objectives within the changing regulatory environment,

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Our financial performance is also substantially affected by a number of external factors outside of our control, including the following:

• Economic conditions, including the effects of pandemics, political conflicts, political instability, trade policies, including tariffs and other barriers to trade, the availability of labor, supply chain volatility, and any actions taken to mitigate and manage such impacts;

• The actions by the Federal Reserve, U.S.

• Economic conditions, and volatility in markets, including the effects of pandemics, wars, political conflicts, political instability and uncertainty both in the U.S.

and abroad, government spending policies, trade policies, including tariffs and tariff counter-measures, and other barriers to trade (including the threat of such actions), the availability of labor, supply chain volatility, and any actions taken to mitigate and manage such impacts;

• The actions or inactions (including assumptions about potential actions or inactions) by the Federal Reserve, U.S.

Treasury, and other government agencies, including those that impact money supply and market interest rates and inflation;

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• Changes in the competitive landscape;

• Impacts of changes in federal, state, and local governmental policy, including on the regulatory landscape, capital markets, taxes, infrastructure spending, and social programs;

• Impacts of changes in federal, state, and local governmental policy, including on the regulatory landscape, capital markets, employment and unemployment levels in our markets, taxes, infrastructure spending, and social programs;

• The effect of climate change on our business and performance, including indirectly through impacts on our customers;

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• The impact on customers and changes in customer behavior due to changing business and economic conditions or regulatory or legislative initiatives.

The impact of these items, where material, is discussed in the applicable sections of this Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Risks related to these items, where material to the Company’s business, are discussed in the applicable sections of this Management’s Discussion and Analysis of Financial Condition and Results of Operation.

For additional information on the risks we face, see Part II, Item 1A.

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The following table contains selected historical consolidated financial data as of the dates and for the periods shown.

The selected balance sheet data as of March 31, 2025, and March 31, 2024, and the selected income statement data for the three months ended March 31, 2025, and March 31, 2024, have been derived from our consolidated financial statements included elsewhere in this Form 10-Q and in other filings we have submitted with the SEC and should be read in conjunction with the other information contained in this Form 10-Q.

As of the Three Months Ended March 31,

The selected balance sheet data as of June 30, 2025, and June 30, 2024, and the selected income statement data for the three and six months ended June 30, 2025, and June 30, 2024, have been derived from our consolidated financial statements included elsewhere in this Form 10-Q and in other filings we have submitted with the SEC and should be read in conjunction with the other information contained in this Form 10-Q.

As of the Three and Six Months Ended June 30,

(In thousands, except ratios, share and per share data) 2025 2024

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769,605 682,713

As of or for the Three Months Ended March 31,

As of or for the Three Months Ended June 30,

As of or for the Six Months Ended June 30,

2025 2024 2025 2024

Selected Operating Data:

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Provision (recapture) for credit losses

624 23,910 1,125 23,240

Total non-interest income 12,877 9,505 22,900 13,759

Total non-interest expenses 49,305 64,432 98,969 85,597

Income before income taxes

Income tax expense

Income (loss) before income taxes

37,181 (19,072) 70,026 (13,182)

Income tax expense (benefit)

7,284 (2,153) 12,928 (1,475)

Preferred stock dividends

Net income applicable to common shares

225 225 450 225

Net income (loss) applicable to common shares

29,672 (17,144) 56,648 (11,932)

Per Share Data:

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15,007,712 14,932,169 15,007,712 14,932,169

Basic net income per common share

Basic net income (loss) per common share

$ 1.98 $ (1.41) $ 3.78 $ (1.22)

Diluted net income per common share

Diluted net income (loss) per common share

1.97 (1.41) 3.77 (1.22)

Dividends declared per common share

0.55 0.53 1.10 1.06

Common stock dividend payout ratio (1)

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$ 51.28 $ 45.72 $ 51.28 $ 45.72

As of or for the Three Months Ended March 31,

As of or for the Three Months Ended June 30,

As of or for the Six Months Ended June 30,

2025 2024 2025 2024

Performance Ratios:

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Return on average equity (2)

15.50 (12.44) 15.04 (5.52)

Interest rate spread (3)

3.57 3.35 3.56 2.84

Net interest margin (4)

4.17 4.06 4.17 3.56

Efficiency ratio (5)

56.60 93.02 58.18 89.49

Capital Ratios:

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Tier 1 capital to average assets (leverage ratio)

10.42 9.04 10.42 9.04

Asset Quality Ratios:

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(5) The efficiency ratio represents non-interest expense as a percentage of the sum of net interest income and non-interest income.

Results of Operations for the Three Months Ended March 31, 2025, and March 31, 2024

Net income applicable to common shares for the three months ended March 31, 2025, was $27.0 million, compared to net income applicable to common shares of $5.2 million during the three months ended March 31, 2024.

The $21.8 million increase was primarily due to results that reflect combined income after the Merger completion for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Net interest income increased by $50.9 million to $73.0 million for the three months ended March 31, 2025, compared to $22.1 million for the three months ended March 31, 2024.

The main driver for this increase was the impact of the Merger.

For the three months ended March 31, 2025, the Company recorded credit provision expense of $0.5 million compared to a provision recapture of $0.7 million for the three months ended March 31, 2024.

For the three months ended March 31, 2025, the Company recognized additional credit loss expense on loans which led to an increase in credit provision expense for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Non-interest income increased by $5.8 million, or 135.6%, to $10.0 million for the three months ended March 31, 2025, as compared to $4.3 million for the three months ended March 31, 2024, as a result of the Merger.

All categories of non-interest income increased as a result of the combined operations for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Non-interest expense increased by $28.5 million, or 134.7%, to $49.7 million for the three months ended March 31, 2025, as compared to $21.2 million for the three months ended March 31, 2024.

The increase was primarily due to effect of the Merger.

Results of Operations for the Six Months Ended June 30, 2025, and June 30, 2024

Net income applicable to common shares for the six months ended June 30, 2025, was $56.6 million, compared to a net loss applicable to common shares of $11.9 million during the six months ended June 30, 2024.

The $68.6 million increase was due to results that reflect a full six months of combined income after the Merger completion for the six months ended June 30, 2025, and merger related expenses and a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger which were recognized in the six months ended June 30, 2024.

Net interest income increased by $65.3 million to $147.2 million for the six months ended June 30, 2025, compared to $81.9 million for the six months ended June 30, 2024.

The main driver for this increase was results that reflect a full six months of combined income after the Merger.

For the six months ended June 30, 2025, the Company recorded credit provision expense of $1.1 million compared to a provision of $23.2 million for the six months ended June 30, 2024.

For the six months ended June 30, 2024, the Company recognized a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger, which resulted in a higher credit provision expense.

Non-interest income increased by $9.1 million, or 66.4%, to $22.9 million for the six months ended June 30, 2025, as compared to $13.8 million for the six months ended June 30, 2024.

All categories of non-interest income except net gains on securities increased due to results that reflect a full six months of combined income after the Merger for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Non-interest expense increased by $13.4 million, or 15.6%, to $99.0 million for the six months ended June 30, 2025, as compared to $85.6 million for the six months ended June 30, 2024.

The increase was primarily due to results that reflect a full six months of combined operations after the Merger but reflect some merger cost savings associated with the Merger for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Net Interest Income and Net Interest Margin

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Interest rate risk is managed by monitoring the pricing, maturity and repricing options of all classes of interest-bearing assets and liabilities.

Net interest income totaled $73.0 million for the three months ended March 31, 2025, compared to $22.1 million for the three months ended March 31, 2024.

The increase in net interest income was primarily driven by higher interest earning assets, higher rates, and higher accretion income, as a result of the Merger.

Accretion income associated with acquired loans and borrowings totaled $11.4 million for the three months ended March 31, 2025.

Amortization expense associated with fair value marks for time deposits, subordinated debt, and trust preferred securities totaled $2.2 million for the three months ended March 31, 2025.

The tax-adjusted net interest margin was 4.18% for the three months ended March 31, 2025, compared to 2.68% for the three months ended March 31, 2024.

The increase in tax-adjusted net interest margin was primarily driven by the effect of the Merger and the acquisition of additional, higher-yielding interest-earning assets.

The yield for the taxable loan portfolio was 6.96% for the three months ended March 31, 2025, compared to 5.41% for the three months ended March 31, 2024.

The increase was primarily the result of the effect of the Merger, which resulted in the acquisition of additional, higher-yielding loans.

The tax-adjusted yield on the total investment securities portfolio was 3.85% for the three months ended March 31, 2025, compared to 3.43% for the three months ended March 31, 2024.

The increase was partly due to higher yields in our investment portfolio in addition to the Merger, which resulted in the acquisition of additional securities with higher tax-adjusted yields.

The yield on interest-bearing deposits increased to 2.53% during the three months ended March 31, 2025, from 2.41% during the three months ended March 31, 2024.

The increase was a result of the Merger, which resulted in the assumption of additional interest-bearing deposits with higher interest rates.

The yield on our short-term borrowings for the three months ended March 31, 2025, was 3.88%, compared to 4.82% for the three months ended March 31, 2024.

The decrease was due to decreases in the Federal Funds Rate and other short-term market rates.

The yield on our subordinated debt assumed in the Merger was 9.85%.

The following table sets forth the major components of net interest income and the related yields and rates for the three months ended March 31, 2025, and March 31, 2024, for comparison (dollars in thousands).

For the Three Months Ended March 31,

Net interest income totaled $147.2 million for the six months ended June 30, 2025, compared to $81.9 million for the six months ended June 30, 2024.

The increase in net interest income was primarily driven by results that reflect a full six months of combined income after the Merger as well as higher rates on interest-earning assets, lower rates on interest-bearing liabilities, and higher accretion income, as a result of the Merger.

Accretion income associated with acquired loans and borrowings totaled $23.0 million for the six months ended June 30, 2025 compared to $13.3 million for the six months ended June 30, 2024.

Amortization expense associated with fair value marks for time deposits, subordinated debt, and trust preferred securities totaled $3.6 million for the six months ended June 30, 2025 compared to $2.5 million the six months ended June 30, 2024.

The tax-adjusted net interest margin was 4.17% for the six months ended June 30, 2025, compared to 3.56% for the six months ended June 30, 2024.

The increase in tax-adjusted net interest margin was primarily driven by results that reflect a full six months of combined income after the Merger as well as higher rates on interest-earning assets, lower rates on interest-bearing liabilities, and higher accretion income, as a result of the Merger.

The yield for the taxable loan portfolio was 6.93% for the six months ended June 30, 2025, compared to 6.72% for the six months ended June 30, 2024.

The increase was primarily the result of the acquisition of additional, higher-yielding loans.

The tax-adjusted yield on the total investment securities portfolio was 3.90% for the six months ended June 30, 2025, compared to 3.76% for the six months ended June 30, 2024.

The increase was mainly due to higher yields in our investment portfolio.

The yield on interest-bearing deposits decreased to 2.47% during the six months ended June 30, 2025, from 2.73% during the six months ended June 30, 2024.

The decrease was primarily due to lower market interest rates on deposit products reflective of decreases in the Federal Funds rate in the second half of 2024.

The yield on our short-term borrowings for the six months ended June 30, 2025, was 3.90%, compared to 4.58% for the six months ended June 30, 2024.

The decrease was due to decreases in the Federal Funds Rate and other short-term market rates in the second half of 2024.

The yield on our subordinated debt assumed in the Merger was 9.73% for the six months ended June 30, 2025, compared to 10.30% for the six months ended June 30, 2024.

The following table sets forth the major components of net interest income and the related yields and rates for the six months ended June 30, 2025, and June 30, 2024, for comparison (dollars in thousands).

For the Six Months Ended June 30,

Average Outstanding Balance Interest Income/Expense Average Yield / Rate

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Tax-exempt loans (1)(2)

4,057 59 5.90 — — N/A

3,896 113 5.85 1,520 42 5.56

5,643,414 193,947 6.93 3,285,429 109,760 6.72

Interest-earning deposits and fed funds sold 61,175 1,528 5.04 68,229 1,229 3.62

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Subordinated debt borrowings

112,383 2,729 9.85 — — N/A

113,102 5,459 9.73 36,321 1,860 10.30

Total interest-bearing liabilities 5,592,352 75,424 2.72 3,562,632 52,946 2.99

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Taxable-equivalent net interest margin, as presented above, is calculated by dividing FTE net interest income by total average earning assets.

Net interest income, on an FTE basis, is a non-GAAP financial measure that the Company believes to provide a more accurate picture of the interest margin for comparative purposes.

Net interest income, on an FTE basis, is a non-GAAP financial measure that the Company believes provides a more accurate picture of the interest margin for comparative purposes.

Management believes FTE net interest income is a standard practice in the banking industry, and when net interest income is adjusted on an FTE basis, yields on taxable, nontaxable, and partially taxable assets are comparable;

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The following table reconciles GAAP net interest income to FTE net interest income (in thousands).

Six Months Ended

June 30, 2025 June 30, 2024

GAAP Financial Measurements

Interest income - Loans $ 193,834 $ 109,718

Interest income - Tax-exempt loans 89 33

Interest income - Taxable AFS securities and other securities 18,790 19,873

Interest income - Tax-exempt AFS securities 7,206 3,917

Interest income - Other interest income 2,725 1,301

Total Interest Income 222,644 134,842

Interest expense - Deposits 62,282 43,304

Interest expense - Borrowed funds 7,630 7,726

Interest expense - Subordinated debt 5,459 1,860

Interest expense - Other 53 56

Total interest expense 75,424 52,946

Total net interest income $ 147,220 $ 81,896

Non-GAAP Financial Measurements

Tax benefit on tax-exempt interest income $ 1,939 $ 1,050

Total tax benefit on tax-exempt interest income (1) 1,939 1,050

Tax-equivalent net interest income $ 149,159 $ 82,946

(1) Tax benefit was calculated using the federal statutory tax rate of 21%.

Yield/Rate and Volume Analysis

The following table sets forth the dollar difference in interest earned and paid for each major category of interest-earning assets and interest-bearing liabilities for the noted periods and the amount of such change attributable to changes in average balances (volume) or changes in average interest rates.

Interest income and interest expense for the six months ended June 30, 2025, and June 30, 2024, are annualized using actual days over calendar year method.

Volume variances are equal to the increase or decrease in average balance multiplied by current period rates, and rate variances are equal to the increase or decrease in rate times prior period average balances.

Variances attributable to both rate and volume changes are calculated by multiplying the change in rate by the change in average balance and are allocated to the volume variance.

See table below (in thousands).

Six Months Ended June 30, 2025, compared to June 30, 2024

Dollar Increase (Decrease) Due to Change in:

Average Volume Average Yield / Rate

Income from the interest-earning assets:

Loans, (1) gross

$ 75,589 $ 8,598 $ 84,187

AFS securities and other securities (1)

3,332 873 4,205

Interest-bearing deposits and fed funds sold (176) 475 299

Total interest income on interest-earning assets 78,745 9,946 88,691

Expense from the interest-bearing liabilities:

Interest-bearing demand deposits 12,880 (1,344) 11,536

Money market & savings

4,390 1,871 6,261

Brokered CDs & time deposits

4,423 (3,242) 1,181

Total interest expense on interest-bearing deposits 21,693 (2,715) 18,978

Borrowings 4,780 (1,280) 3,500

Total interest expense on interest-bearing liabilities 26,473 (3,995) 22,478

Taxable-equivalent net interest income

$ 52,272 $ 13,941 $ 66,213

(1) Yields and interest income on tax-exempt loans and securities have been computed on a taxable-equivalent basis.

Interest Income

Total interest income was $222.6 million for the six months ended June 30, 2025, compared to $134.8 million for the six months ended June 30, 2024, an increase of 65.1%.

The increase in interest income was due to results that reflect a full six months of combined income after the Merger as well as higher rates on interest-earning assets and higher accretion income, as a result of the Merger.

Interest income on loans increased by $84.2 million and interest income on securities increased $2.2 million, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Accretion income associated with acquired loans and borrowings totaled $23.0 million for the six months ended June 30, 2025 compared to $13.4 million for the six months ended June 30, 2024.

Interest Expense

Total interest expense was $75.4 million for the six months ended June 30, 2025, compared to $52.9 million for the six months ended June 30, 2024.

The increase in interest expense was due to results that reflect a full six months of combined operations after the Merger, partially offset by a decrease in amortization expense associated with fair value marks for liabilities acquired in the Merger, and lower rates on interest-bearing liabilities.

Interest expense on interest-bearing deposits increased by $19.0 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Interest on subordinated debt acquired in the Merger was $5.5 million for the six months ended June 30, 2025, compared to $1.9 million for the six months ended June 30, 2024.

Interest expense on short-term borrowings amounted to $7.6 million for the six months ended June 30, 2025, compared to $7.7 million for the six months ended June 30, 2024.

Provision for (Recapture of) Credit Losses

The provision for credit losses was $1.1 million for the six months ended June 30, 2025, compared to a provision of $23.2 million for the six months ended June 30, 2024.

For the six months ended June 30, 2024, the Company recognized a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger, which resulted in a higher credit provision expense.

See Note 4 - Allowance for Credit Losses in Notes to Consolidated Financial Statements for further information.

Non-interest Income

The following table sets forth the various components of our non-interest income for the periods indicated (in thousands):

Six months ended June 30, Increase (Decrease)

2025 2024 Amount Percent

Fiduciary and wealth management $ 4,868 $ 3,630 $ 1,238 34.1 %

Service charges and fees 4,125 2,470 1,655 67.0

Net gains (losses) on securities 39 613 (574) 93.6

Income from company-owned life insurance 4,175 1,469 2,706 184.2

Bank debit and other card revenue 5,908 3,588 2,320 64.7

Other non-interest income 3,785 1,989 1,796 90.3

Total $ 22,900 $ 13,759 $ 9,141 66.4 %

Non-interest income increased 66.4% for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

The largest dollar increase was a $2.7 million increase in income from company-owned life insurance for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

This increase was driven by an increase in the collection of death proceeds from company-owned life insurance for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

The second largest dollar increase was a $2.3 million increase in bank debit and other card revenue for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

This increase was primarily driven by results that reflect a full six months of combined income after the Merger and increased customer card activity for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

All other categories of non-interest income except net gains on securities also increased, primarily due to results that reflect a full six months of combined income after the Merger for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Non-interest Expense

The following table sets forth the various components of our non-interest expense for the periods indicated (in thousands):

Six months ended June 30, Increase (Decrease)

2025 2024 Amount Percent

Salaries and wages $ 42,261 $ 30,413 $ 11,848 39.0 %

Pensions and other employee benefits 9,203 7,668 1,535 20.0

Occupancy 7,566 4,535 3,031 66.8

Equipment rentals, depreciation and maintenance 8,184 13,944 (5,760) (41.3)

Other 31,755 29,037 2,718 9.4

Total $ 98,969 $ 85,597 $ 13,372 15.6 %

Non-interest expense increased $13.4 million, or 15.6%, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

In total, all categories of non-interest expense increased except equipment rentals, depreciation and maintenance.

See Note 13 — Other Operating Expense in Notes to Consolidated Financial Statements for further information on “Other” non-interest expense.

Income Tax Expense

Income tax expense was $12.9 million for the six months ended June 30, 2025, an increase of $14.4 million from the tax benefit received for the six months ended June 30, 2024.

The increase was due to the increase in net income and additional state taxes incurred in the combined market area after the Merger, for the six months ended June 30, 2025, when compared to the six months ended June 30, 2024.

For the six months ended June 30, 2025, the effective tax rate was 18.5%, while the effective tax benefit was 11.2% for June 30, 2024.

Results of Operations for the Three Months Ended June 30, 2025, and June 30, 2024

Net income applicable to common shares for the three months ended June 30, 2025, was $29.7 million, compared to a net loss applicable to common shares of $17.1 million during the three months ended June 30, 2024.

The $46.8 million increase was due to results that reflect a full three months of combined income after the Merger completion for the three months ended June 30, 2025, and merger related expenses and a one-time CECL Day 2 provision for non-PCD assets acquired in the merger which were recognized in the three months ended June 30, 2024.

Net interest income increased by $14.5 million to $74.2 million for the three months ended June 30, 2025, compared to $59.8 million for the three months ended June 30, 2024.

The main driver for this increase was results that reflect a full three months of combined income after the Merger and lower rates on interest-bearing liabilities.

For the three months ended June 30, 2025, the Company recorded credit provision expense of $0.6 million compared to a provision of $23.9 million for the three months ended June 30, 2024.

For the three months ended June 30, 2024, the Company recognized a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger, which resulted in a higher credit provision expense.

Non-interest income increased by $3.4 million, or 35.5%, to $12.9 million for the three months ended June 30, 2025, as compared to $9.5 million for the three months ended June 30, 2024.

All categories of non-interest income except net gains on securities increased due to results that reflect a full three months of combined income after the Merger for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Non-interest expense decreased by $15.1 million, or 23.5%, to $49.3 million for the three months ended June 30, 2025, as compared to $64.4 million for the three months ended June 30, 2024.

The decrease was primarily due to the effect of cost savings associated with the Merger that were realized through the end of 2024 and into early 2025.

Net Interest Income and Net Interest Margin

Net interest income is the principal component of the Company’s income stream and represents the difference, or spread, between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds.

Net interest margin, stated as a percentage, is the yield obtained by dividing the difference between interest income generated on earning assets and the interest expense paid on all funding sources by average earning assets.

Fluctuations in interest rates as well as changes in the volume and mix of earning assets and interest-bearing liabilities can impact net interest income and net interest margin.

Management closely monitors both total net interest income and the net interest margin and seeks to maximize net interest income without exposing the Company to an excessive level of interest rate risk through our asset and liability policies.

Interest rate risk is managed by monitoring the pricing, maturity and repricing options of all classes of interest-bearing assets and liabilities.

Net interest income totaled $74.2 million for the three months ended June 30, 2025, compared to $59.8 million for the three months ended June 30, 2024.

The increase in net interest income was primarily driven by results that reflect a full three months of combined income after the Merger as well as lower rates on interest-bearing liabilities.

Accretion income associated with acquired loans and borrowings totaled $11.5 million for the three months ended June 30, 2025, compared to $13.4 million for the three months ended June 30, 2024.

Amortization expense associated with fair value marks for time deposits, subordinated debt, and trust preferred securities totaled $1.4 million for the three months ended June 30, 2025, compared to $2.5 million for the three months ended June 30, 2024.

The tax-adjusted net interest margin was 4.17% for the three months ended June 30, 2025, compared to 4.06% for the three months ended June 30, 2024.

The increase in tax-adjusted net interest margin was primarily driven by results that reflect a full three months of combined income after the Merger as well as lower rates on interest-bearing liabilities.

The yield for the taxable loan portfolio was 6.90% for the three months ended June 30, 2025, compared to 7.33% for the three months ended June 30, 2024.

The decrease was primarily the result of an increase in balance of additional, lower-yielding loans and lower accretion income for three months ended June 30, 2025 compared to the three months ended June 30, 2024.

The tax-adjusted yield on the total investment securities portfolio was 3.95% for the three months ended June 30, 2025, compared to 4.05% for the three months ended June 30, 2024.

The decrease was primarily the result of an increase in balance of lower-yielding securities for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

The yield on interest-bearing deposits decreased to 2.41% during the three months ended June 30, 2025, from 2.90% during the three months ended June 30, 2024.

The decrease was primarily due to lower market interest rates on deposit products reflecting decreases in the Federal Funds rate in the second half of 2024.

The yield on our short-term borrowings for the three months ended June 30, 2025, was 3.91%, compared to 4.38% for the three months ended June 30, 2024.

The decrease was due to decreases in the Federal Funds Rate and other short-term market rates in the second half of 2024.

The yield on our subordinated debt assumed in the Merger was 9.62% for the three months ended June 30, 2025, compared to 10.30% for the three months ended June 30, 2024.

The following table sets forth the major components of net interest income and the related yields and rates for the three months ended June 30, 2025, and June 30, 2024, for comparison (dollars in thousands).

For the Three Months Ended June 30,

Average Outstanding Balance Interest Income/Expense Average Yield / Rate

Loans, gross (1)(2)

$ 5,627,236 $ 96,803 6.90 % $ 4,481,993 $ 81,673 7.33 %

Tax-exempt loans (1)(2)

3,737 55 5.90 3,041 42 5.55

5,630,973 96,858 6.90 4,485,034 81,715 7.33

Interest-earning deposits and fed funds sold 81,369 950 4.68 94,765 833 3.54

Taxable AFS securities and other securities

1,059,310 10,123 3.83 988,492 11,002 4.48

Tax-exempt AFS securities (3)

476,586 4,986 4.20 426,092 3,235 3.05

Total securities 1,535,896 15,109 3.95 1,414,584 14,237 4.05

Total interest-earning assets 7,248,238 112,917 6.25 5,994,383 96,785 6.49

Non-interest-earning assets 615,947 484,149

Total assets $ 7,864,185 $ 6,478,532

Liabilities and shareholders’ equity:

Non-interest-bearing demand $ 1,352,785 $ 1,207,443

Interest-bearing demand 2,239,100 12,318 2.21 % 1,587,914 11,834 3.00 %

Money market & savings

1,648,338 8,268 2.01 1,480,985 5,616 1.53

Brokered CDs & time deposits

1,173,213 9,845 3.37 1,141,758 12,923 4.55

Total interest-bearing deposits 5,060,651 30,431 2.41 4,210,657 30,373 2.90

Total deposits 6,413,436 30,431 1.90 5,418,100 30,373 2.25

Short-term borrowings and other

457,775 4,464 3.91 376,063 4,099 4.38

Subordinated debt borrowings

113,813 2,730 9.62 72,643 1,860 10.30

Total interest-bearing liabilities 5,632,239 37,625 2.68 4,659,363 36,332 3.14

Non-interest-bearing liabilities 111,394 57,241

Equity 767,767 554,485

Total liabilities and equity $ 7,864,185 $ 6,478,532

Taxable-equivalent net interest income /net interest spread (4)

75,292 3.57 % 60,453 3.35 %

Taxable-equivalent net interest margin (5)

4.17 % 4.06 %

Taxable-equivalent net adjustment (1,059) (688)

Net interest income $ 74,233 $ 59,765

Net interest-earning assets $ 1,615,999 $ 1,335,020

(1) Non-accrual loans are included in average loan balances.

(2) Loan fees are included in the calculation of interest income.

(3) Yields and interest income on tax-exempt assets are computed on a taxable-equivalent basis assuming a 21% tax rate.

(4) The interest rate spread represents the difference between the fully taxable-equivalent weighted-average yield on interest-earning assets and the weighted-average yield of interest-bearing liabilities for the period.

(5) The net interest margin represents FTE net interest income as a percent of average interest-earning assets for the period.

Taxable-equivalent net interest margin, as presented above, is calculated by dividing FTE net interest income by total average earning assets.

Net interest income, on an FTE basis, is a non-GAAP financial measure that the Company believes provides a more accurate picture of the interest margin for comparative purposes.

however, the adjustment to an FTE basis has no impact on net income.

FTE net interest income is calculated by adding the tax benefit on certain financial interest-earning assets, whose interest is tax-exempt, to total interest income then subtracting total interest expense.

As a non-GAAP measure, FTE net interest income should not be considered as a substitute for the nearest comparable GAAP measure, net interest income.

Net interest income shown elsewhere in this presentation is GAAP net interest income.

The following table reconciles GAAP net interest income to FTE net interest income (in thousands).

Three Months Ended

March 31, 2025 March 31, 2024

June 30, 2025 June 30, 2024

GAAP Financial Measurements

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Interest income and interest expense for the three months ended March 31, 2025, and March 31, 2024, are annualized using actual days over calendar year method.

Interest income and interest expense for the three months ended June 30, 2025, and June 30, 2024, are annualized using actual days over calendar year method.

1 unchanged sentence

See table below (in thousands).

Three Months Ended March 31, 2025, compared to March 31, 2024

Three Months Ended June 30, 2025, compared to June 30, 2024

Dollar Increase (Decrease) Due to Change in:

9 unchanged sentences

Interest-bearing demand deposits 6,603 (6,119) 484

Savings deposits 1,472 (637) 835

Time deposits 4,661 (403) 4,258

Money market & savings

2,240 412 2,652

Brokered CDs & time deposits

1,755 (4,833) (3,078)

Total interest expense on interest-bearing deposits 10,598 (10,540) 58

5 unchanged sentences

Interest Income

Total interest income was $110.8 million for the three months ended March 31, 2025, compared to $38.7 million for the three months ended March 31, 2024, an increase of 185.9%.

The increase in interest income was due to the effect of the Merger and the acquisition of additional interest-earning assets.

Interest income on loans increased by $69.0 million and interest income on securities increased $2.5 million, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Total interest income was $111.9 million for the three months ended June 30, 2025, compared to $96.1 million for the three months ended June 30, 2024, an increase of 16.4%.

The increase in interest income was primarily due to results that reflect a full three months of combined income after the Merger.

Interest income on loans increased by $15.1 million and interest income on securities decreased $0.2 million, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Accretion income associated with acquired loans and borrowings totaled $11.5 million for the three months ended June 30, 2025, compared to $13.4 million for the three months ended June 30, 2024.

Interest Expense

Total interest expense was $37.8 million for the three months ended March 31, 2025, compared to $16.6 million for the three months ended March 31, 2024.

The increase in interest expense was a result of the Merger and the assumption of additional interest-bearing liabilities.

Interest expense on interest-bearing deposits increased by $18.9 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Interest on subordinated debt acquired in the Merger was $2.7 million for the three months ended March 31, 2025, while interest expense on short-term borrowings amounted to $3.2 million for the three months ended March 31, 2025, compared to $3.7 million for the three months ended March 31, 2024.

Total interest expense was $37.6 million for the three months ended June 30, 2025, compared to $36.3 million for the three months ended June 30, 2024.

The increase in interest expense was due to results that reflect a full three months of combined operations after the Merger, partially offset by a decrease in amortization expense associated with fair value marks for liabilities acquired in the Merger, and lower rates on interest-bearing liabilities.

Interest expense on interest-bearing deposits increased by $0.1 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Interest on subordinated debt acquired in the Merger was $2.7 million for the three months ended June 30, 2025, compared to $1.9 million for the three months ended June 30, 2024.

Interest expense on short-term borrowings amounted to $4.4 million for the three months ended June 30, 2025, compared to $4.1 million for the three months ended June 30, 2024.

Provision for (Recapture of) Credit Losses

The provision for credit losses was $0.5 million for the three months ended March 31, 2025, compared to a provision recapture of $0.7 million for the three months ended March 31, 2024.

The increased provision expense was due to additional credit loss expense in the loan portfolio which was somewhat offset by a recapture in credit expense on off-balance sheet credit exposures, compared to the three months ended March 31, 2024.

The provision for credit losses was $0.6 million for the three months ended June 30, 2025, compared to a provision of $23.9 million for the three months ended June 30, 2024.

For the three months ended June 30, 2024, the Company recognized a one-time CECL Day 2 provision for non-PCD assets acquired in the Merger, which resulted in a higher credit provision expense.

See Note 4 - Allowance for Credit Losses in Notes to Consolidated Financial Statements for further information.

1 unchanged sentence

The following table sets forth the various components of our non-interest income for the periods indicated (in thousands):

Three months ended March 31,

Three months ended June 30,

Increase (Decrease)

2 unchanged sentences

Service charges and fees 2,036 1,813 223 12.3

Net gains (losses) on securities 1 — 1 NM

Net gains (losses) on securities 38 613 (575) (93.8)

Income from company-owned life insurance 2,982 922 2,060 223.4

2 unchanged sentences

Total $ 12,877 $ 9,505 $ 3,372 35.5 %

Non-interest income increased 135.6% for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

The increase was primarily driven by the Merger.

The largest increase was a $1.8 million increase in bank debit and other card revenue for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

This increase was driven by the Merger and the increase in card revenue as a result of the increase in the customer base.

The second largest increase was a $1.4 million increase in service charges and fees for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

This increase was primarily driven by an increase in deposit-based fees of $1.3 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, resulting from the increase in accounts as a result of the Merger.

All other categories of non-interest income also increased, primarily due to the Merger for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Non-interest income increased 35.5% for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

The largest dollar increase was a $2.1 million increase in income from company-owned life insurance for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

This increase was driven by an increase in the collection of death proceeds from company-owned life insurance for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

All other categories of non-interest income except net gains on securities also increased, primarily due to results that reflect a full three months of combined income after the Merger for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Non-interest Expense

The following table sets forth the various components of our non-interest expense for the periods indicated (in thousands):

Three months ended March 31,

Three months ended June 30,

Increase (Decrease)

6 unchanged sentences

Total $ 49,305 $ 64,432 $ (15,127) (23.5) %

Non-interest expense increased $28.5 million, or 134.7%, for the three months ended March 31, 2025, compared to March 31, 2024.

The increase was primarily due to effect of the Merger.

All other categories of non-interest expense also increased, primarily due to the effect of the Merger, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Non-interest expense decreased $15.1 million, or 23.5%, for the three months ended June 30, 2025, compared to June 30, 2024.

The decrease was primarily due to effect of merger cost savings associated with the Merger that were realized through the end of 2024 and into early 2025.

The largest dollar decrease was $8.6 million for equipment rentals, depreciation and maintenance, while pensions and other employee benefits and other non-interest expense also declined for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

See Note 13 — Other Operating Expense in Notes to Consolidated Financial Statements for further information on “Other” non-interest expense.

Income Tax Expense

Income tax expense was $5.6 million for the three months ended March 31, 2025, an increase of $5.0 million from the tax provision for the three months ended March 31, 2024.

The increase was due to the increase in net income and additional state taxes incurred in the combined market area after the Merger, for the three months ended March 31, 2025, when compared to the three months ended March 31, 2024.

For the three months ended March 31, 2025, the effective tax rate was 17.2%, while the effective tax rate was 11.5% for March 31, 2024.

Analysis of Financial Condition for the Period Ended March 31, 2025, and December 31, 2024

Assets increased by $25.9 million to $7.84 billion as of March 31, 2025, compared to $7.8 billion as of December 31, 2024.

Loans, net of ACL, decreased by $24.4 million from $5.6 billion as of December 31, 2024, to $5.6 billion as of March 31, 2025.

Deposits increased by $26.6 million and amounted to $6.5 billion at March 31, 2025, compared to $6.5 billion at December 31, 2024.

Short-term borrowings decreased by $65.0 million to $300.0 million as of March 31, 2025, compared to $365.0 million at December 31, 2024.

Subordinated debt and subordinated debt owed to unconsolidated subsidiary trusts, which were assumed in the Merger, totaled $113.3 million at March 31, 2025, compared to $111.9 million at December 31, 2024.

Income tax expense was $7.3 million for the three months ended June 30, 2025, an increase of $9.4 million from the tax benefit of $2.2 million for the three months ended June 30, 2024.

The increase was due to the increase in net income and additional state taxes incurred in the combined market area after the Merger, for the three months ended June 30, 2025, when compared to the three months ended June 30, 2024.

For the three months ended June 30, 2025, the effective tax rate was 19.6%, while the effective tax benefit was 11.3% for June 30, 2024.

Analysis of Financial Condition for the Period Ended June 30, 2025, and December 31, 2024

Assets increased by $240.9 million to $8.05 billion as of June 30, 2025, compared to $7.8 billion as of December 31, 2024.

Loans, net of ACL, decreased by $81.0 million from $5.6 billion as of December 31, 2024, to $5.5 billion as of June 30, 2025.

Deposits decreased by $124.3 million and amounted to $6.4 billion at June 30, 2025, compared to $6.5 billion at December 31, 2024.

Short-term borrowings increased by $285.0 million to $650.0 million as of June 30, 2025, compared to $365.0 million at December 31, 2024.

Subordinated debt and subordinated debt owed to unconsolidated subsidiary trusts, which were assumed in the Merger, totaled $114.7 million at June 30, 2025, compared to $111.9 million at December 31, 2024.

Investment Securities

5 unchanged sentences

The majority of our AFS investment portfolio is comprised of obligations of states and municipalities and residential mortgage-backed securities.

During the three months ended March 31, 2025, the unrealized losses on our holdings decreased $7.7 million from December 31, 2024.

During the six months ended June 30, 2025, the unrealized losses on our holdings decreased $7.9 million from December 31, 2024.

The Company determined that the declines in market value were due to increases in interest rates and market movements and not due to credit factors.

Therefore, the Company has concluded that the unrealized losses for the AFS securities do not require an ACL at March 31, 2025, or at December 31, 2024.

Therefore, the Company has concluded that the unrealized losses for the AFS securities do not require an ACL at June 30, 2025, or at December 31, 2024.

The Company has sufficient access to liquidity such that management does not believe it would be necessary to sell any of its investment securities at a loss to offset any unexpected deposit outflows.

Management believes the structure of the Bank’s investment portfolio is appropriately aligned with the rest of the balance sheet to protect against significant and unexpected charges against earnings and capital.

The following tables reflect the amortized cost and fair market values for the total portfolio for each category of investment for March 31, 2025, and December 31, 2024 (in thousands):

March 31, 2025

The following tables reflect the amortized cost and fair market values for the total portfolio for each category of investment for June 30, 2025, and December 31, 2024 (in thousands):

June 30, 2025

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

21 unchanged sentences

$ 1,549,589 $ 1,658 $ 118,876 $ 1,432,371

The investment maturity table below summarizes contractual maturities for our investment securities at March 31, 2025.

The investment maturity table below summarizes contractual maturities for our investment securities at June 30, 2025.

The actual timing of principal payments may differ from remaining contractual maturities because obligors may have the right to repay certain obligations with or without penalties.

The overall weighted average duration of the Company’s investment portfolio is 4.6 years at March 31, 2025.

The overall weighted average duration of the Company’s investment portfolio is 4.6 years at June 30, 2025.

The weighted-average yield below represents the effective yield for the investment securities and is calculated based on the amortized cost of each security (dollars in thousands).

Interest on securities below excludes tax-equivalent adjustments.

March 31, 2025

June 30, 2025

One Year or Less One to Five Years Five to Ten Years After Ten Years Total

16 unchanged sentences

The following tables set forth the composition of our loan portfolio as of the dates indicated (in thousands):

March 31, 2025

June 30, 2025

December 31, 2024

8 unchanged sentences

Loans, net $ 5,523,201 $ 5,604,196

The loan portfolio, excluding ACL, at March 31, 2025, decreased by $24.7 million primarily due to the exiting of loans that do not align with the Company’s desired risk profile.

The following table shows the maturity distribution for total loans outstanding as of March 31, 2025.

The loan portfolio, excluding ACL, at June 30, 2025, decreased by $81.8 million from December 31, 2024, primarily due to the exiting of loans that do not align with the Company’s desired risk profile.

The following table shows the maturity distribution for total loans outstanding as of June 30, 2025.

The maturity distribution is grouped by remaining scheduled principal payments that are due in the following periods.

The principal balance of loans is indicated by both fixed and floating rate categories in the table below (in thousands).

March 31, 2025

June 30, 2025

Within One Year One Year to Five Years Five Years to 15 Years After 15 Years

14 unchanged sentences

A loan is placed on non-accrual status when (i) the Company is advised by the borrower that scheduled principal or interest payments cannot be met, (ii) when management’s best judgment indicates that payment in full of principal and interest can no longer be expected, or (iii) when any such loan or obligation becomes delinquent for 90 days, unless it is both well-secured and in the process of collection.

The Company’s asset quality remained relatively stable through the first quarter of 2025 with the nonaccrual loan balance increasing by $5.6 million from December 31, 2024.

However, the Company’s loans 90 days past due and still accruing increased $20.8 million from December 31, 2024.

The Company’s non-performing assets, which includes non-performing loans consisting of non-accrual loans, loans that are more than 90 days past due and still accruing, and other real estate owned as of March 31, 2025, totaled $67.4 million, up from $41.2 million at December 31, 2024.

The following table summarizes the Company’s non-performing assets as of March 31, 2025, and December 31, 2024 (in thousands):

March 31, 2025 December 31, 2024

The Company’s asset quality metrics remain within the Company’s risk profile with adequate reserve coverage.

The Company’s nonaccrual loan balances increased by $45.2 million from December 31, 2024, while the Company’s loans 90 days past due and still accruing increased $2.0 million from December 31, 2024.

The Company’s non-performing assets, which includes non-performing loans consisting of non-accrual loans, loans that are more than 90 days past due and still accruing, and other real estate owned as of June 30, 2025, totaled $88.3 million, an increase of $47.1 million from $41.2 million at December 31, 2024.

The following table summarizes the Company’s non-performing assets as of June 30, 2025, and December 31, 2024 (in thousands):

June 30, 2025 December 31, 2024

Non-accrual loans $ 81,059 $ 35,871

10 unchanged sentences

Management believes its approach properly addresses relevant accounting and bank regulatory guidance for loans both collectively and individually evaluated.

The Company recorded a provision expense of $0.9 million and a provision recapture of $0.7 million on loans for the three months ended March 31, 2025, and March 31, 2024, respectively.

The increase in provision expense for the three months ended was due and increase in expected losses under the CECL model.

Gross charged-off loans were $1.4 million and $30.0 thousand for the three months ended March 31, 2025, and March 31, 2024, respectively.

Gross recoveries totaled $237.0 thousand and $5.0 thousand for the three months ended March 31, 2025, and March 31, 2024, respectively.

The ACL as a percentage of gross loans, net of unearned income, was 1.20% and 1.16% as of March 31, 2025, and March 31, 2024, respectively.

The following table summarizes the changes in the Company’s credit loss experience by portfolio for the three months ended March 31, 2025, and 2024 (dollars in thousands):

Three months ended

March 31, 2025

March 31, 2024

The Company recorded a provision expense of $0.7 million and a provision of $20.1 million on loans for the three months ended June 30, 2025, and June 30, 2024, respectively, and a provision of $1.6 million and a provision of $19.4 million on loans for the six months ended June 30, 2025, and June 30, 2024, respectively.

For the three and six months ended June 30, 2024, the Company recorded a $23.9 million provision to establish an allowance for acquired PCD loans.

Gross charged-off loans were $1.5 million and $611.0 thousand for the three months ended June 30, 2025, and June 30, 2024, respectively and $3.0 million and $641.0 thousand for the six months ended June 30, 2025, and June 30, 2024, respectively.

Gross recoveries totaled $326.0 thousand and $12.0 thousand for the three months ended June 30, 2025, and June 30, 2024, respectively and $563.0 thousand and $17.0 thousand for the six months ended June 30, 2025, and June 30, 2024, respectively.

The ACL as a percentage of gross loans, net of unearned income, was 1.20% and 1.21% as of June 30, 2025, and June 30, 2024, respectively.

The following table summarizes the changes in the Company’s credit loss experience by portfolio for the three and six months ended June 30, 2025, and 2024 (dollars in thousands):

Three months ended Six months ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Loans outstanding at end of period $ 5,590,457 $ 5,616,724 $ 5,590,457 $ 5,616,724

Balance of allowance at beginning of period (67,753) (24,606) (68,040) (25,301)

Allowance established for acquired PCD Loans — (23,910) — (23,910)

Loans charged-off:

21 unchanged sentences

Net charge-offs to average outstanding loans during the period (2)

0.02 0.01 0.04 0.02

Allowance for credit losses as a percentage of non-performing loans (3)

78.63 207.10 78.63 207.10

(1) The allowance coverage ratio is calculated by dividing the ACL at the end of the period by gross loans, net of unearned income at the end of the period.

1 unchanged sentence

(3) The Allowance for credit losses as a percentage of non-performing loans ratio is calculated by dividing the ACL at the end of the period by non-accrual loans and loans 90 days past due and still accruing at the end of the period.

The following table summarizes the ACL by portfolio with a comparison of the percentage composition in relation to total ACL and allowance for credit losses and total loans as of March 31, 2025, and December 31, 2024 (dollars in thousands).

March 31, 2025

The following table summarizes the ACL by portfolio with a comparison of the percentage composition in relation to total ACL and allowance for credit losses and total loans as of June 30, 2025, and December 31, 2024 (dollars in thousands).

June 30, 2025

Allowance for credit losses Percent of Allowance in Each Category to Total Allocated ACL Percent of Loans in Each Category to Total Loans

33 unchanged sentences

For more discussion of brokered time deposits, see the Deposits heading below this section.

As of March 31, 2025, the Company has available unused borrowing capacity of $4.1 billion through its available lines of credit with the FHLB of Atlanta, the Federal Reserve Borrower-In-Custody Program line, and unsecured federal fund lines of credit from correspondent banking relationships.

As of June 30, 2025, the Company has available unused borrowing capacity of $4.1 billion through its available lines of credit with the FHLB of Atlanta, the Federal Reserve Borrower-In-Custody Program line, and unsecured federal fund lines of credit from correspondent banking relationships.

Advances on credit lines are secured by both securities and loans.

The following table shows certain information regarding short-term borrowings as of the three months ended March 31, 2025, and December 31, 2024, respectively (dollars in thousands):

Balance at end of period March 31, 2025 December 31, 2024

The following table shows certain information regarding short-term borrowings as of the three months ended June 30, 2025, and December 31, 2024, respectively (dollars in thousands):

Balance at end of period June 30, 2025 December 31, 2024

Short-term borrowings $ 650,000 $ 365,000

Weighted average interest yield at end of period 3.91% 3.35%

The following table shows certain information regarding long-term debt as of the three months ended March 31, 2025, and December 31, 2024, respectively (dollars in thousands):

Balance at end of period March 31, 2025 December 31, 2024

The following table shows certain information regarding long-term debt as of the three months ended June 30, 2025, and December 31, 2024, respectively (dollars in thousands):

Balance at end of period June 30, 2025 December 31, 2024

Subordinated debentures, net $ 97,552 $ 94,872

2 unchanged sentences

Weighted average interest yield at end of period 9.62% 10.08%

Total deposits slightly increased by $26.6 million from December 31, 2024, to March 31, 2025, primarily due to a continued focus on gathering deposits across our commercial and retail businesses.

The Company has brokered time deposits that amounted to $246.9 million as of March 31, 2025, and $244.8 million at December 31, 2024.

Total deposits decreased by $124.3 million from December 31, 2024, to June 30, 2025, primarily due to a decrease in brokered deposits of $112.7 million.

The Company’s brokered time deposits amounted to $132.1 million as of June 30, 2025, and $244.8 million at December 31, 2024.

All of the Company’s brokered deposits are in the form of certificates of deposits that are insured by the FDIC.

Excluding the brokered deposit balance, the total deposit balance increased by $24.5 million from December 31, 2024 to March 31, 2025.

Excluding the brokered deposit balance, the total deposit balance decreased by $11.6 million from December 31, 2024 to June 30, 2025.

The following table sets forth the balance of each category of deposits as of the dates indicated (in thousands):

March 31, 2025

June 30, 2025

December 31, 2024

9 unchanged sentences

Management evaluates its utilization of brokered deposits, taking into consideration the interest rate curve and regulatory views on non-core funding sources, and balances this funding source with its funding needs based on growth initiatives.

The Company has deposits that meet or exceed the FDIC insurance limit of $250,000 in the amounts of $1.9 billion and $1.9 billion at March 31, 2025, and December 31, 2024, respectively.

The Company does not have material deposit concentration risk to any significant market, industry or individual at March 31, 2025 or December 31, 2024.

The following table sets forth maturity ranges of time deposits as of March 31, 2025, that meet or exceed the FDIC insurance limit (in thousands).

March 31, 2025

The Company has deposits that meet or exceed the FDIC insurance limit of $250,000 in the amounts of $2.0 billion and $1.9 billion at June 30, 2025, and December 31, 2024, respectively.

The Company does not have material deposit concentration risk to any significant market, industry or individual at June 30, 2025 or December 31, 2024.

The following table sets forth maturity ranges of time deposits as of June 30, 2025, that meet or exceed the FDIC insurance limit (in thousands).

June 30, 2025

Due within 3 months or less $ 145,785

4 unchanged sentences

Shareholders’ Equity

Total shareholders’ equity at March 31, 2025, was $758.0 million, compared to $730.2 million at December 31, 2024.

Total shareholders’ equity at June 30, 2025, was $780.0 million, compared to $730.2 million at December 31, 2024.

Shareholders’ equity increased by $49.9 million mostly due to an increase in earnings since December 31, 2024.

Accumulated other comprehensive income/(loss) decreased $7.7 million from December 31, 2024, to March 31, 2025, from $(95.7) million to $(88.0) million.

Accumulated other comprehensive income/(loss) decreased $7.9 million from December 31, 2024, to June 30, 2025, from $(95.7) million to $(87.9) million due to a decrease in unrealized losses in our securities portfolio.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis