What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-07 compared with 2025-08-08 · 220 added, 202 removed, 795 unchanged (35% 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, 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;

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 the impact of the federal government shutdown that began in October 2025 and 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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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 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.

As of September 30, 2025, we had total consolidated assets of $7.9 billion, gross loans of $5.6 billion, total deposits of $6.4 billion, and total shareholders’ equity of $822.2 million.

As of September 30, 2025, we had 829 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.

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 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.

The qualitative factors applied at September 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.

However, qualitative factor evaluations are inherently imprecise and require significant management judgement.

However, qualitative factor evaluations are inherently imprecise and require significant management judgment.

The Company’s income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated taxes due.

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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 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.

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Additionally, several large private-sector employers instituted similar return to office mandates in 2024.

We would expect the federal return to office mandate, combined with mandates at private sector employers and decreasing interest rates could help the region’s CRE office market;

The start of the U.S.

federal government’s new fiscal year began October 1, 2025, without the passage of Appropriation Acts or a Continuing Resolution (“CR”) and the government began its shutdown procedures, which included furloughing government civilian employees.

It is unclear at this time when either a CR or Appropriations Act will be enacted.

Notwithstanding the government shutdown, we would expect the federal return to office mandate, combined with mandates at private sector employers and decreasing interest rates could help the region’s CRE office market;

however, we cannot be certain that this would be the case or the degree to which such mandates may improve the CRE sector in our markets in 2025, if at all.

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 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

Additionally, recent reductions (including during the government shutdown), 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 September 30, 2025, was $2.8 billion, or 50.4%, 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 September 30, 2025, was 35.5%, 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 $3.8 billion, or 68.1%, of our total gross loans and 48.1% of total assets at September 30, 2025.

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

September 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 June 30, 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.

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.

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 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.

As of September 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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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.

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

- Risk Factors .

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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 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,

The selected balance sheet data as of September 30, 2025, and September 30, 2024, and the selected income statement data for the three and nine months ended September 30, 2025, and September 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 Nine Months Ended September 30,

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

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811,818 727,646

As of or for the Three Months Ended June 30,

As of or for the Six Months Ended June 30,

As of or for the Three Months Ended September 30,

As of or for the Nine Months Ended September 30,

2025 2024 2025 2024

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$ 54.02 $ 48.63 $ 54.02 $ 48.63

As of or for the Three Months Ended June 30,

As of or for the Six Months Ended June 30,

As of or for the Three Months Ended September 30,

As of or for the Nine Months Ended September 30,

2025 2024 2025 2024

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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 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.

Results of Operations for the Nine Months Ended September 30, 2025, and September 30, 2024

Net income applicable to common shares for the nine months ended September 30, 2025, was $86.4 million, compared to net income applicable to common shares of $15.5 million during the nine months ended September 30, 2024.

The $70.9 million increase was due to results that reflect a full nine months of combined income after the Merger completion for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Net interest income increased by $65.9 million to $221.0 million for the nine months ended September 30, 2025, compared to $155.1 million for the nine months ended September 30, 2024.

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

For the nine months ended September 30, 2025, the Company recorded credit provision expense of $1.4 million compared to a provision of $23.4 million for the nine months ended September 30, 2024.

For the nine months ended September 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 when compared to the nine months ended September 30, 2025.

Non-interest income increased by $10.1 million, or 41.5%, to $34.5 million for the nine months ended September 30, 2025, as compared to $24.4 million for the nine months ended September 30, 2024.

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

Non-interest expense increased by $10.6 million, or 7.8%, to $147.1 million for the nine months ended September 30, 2025, as compared to $136.4 million for the nine months ended September 30, 2024.

The increase was primarily due to results that reflect a full nine months of combined operations after the Merger but reflect some continued operating efficiency gains, as a result of the merger, for the nine months ended September 30, 2025, compared to the nine months ended September 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 $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.

Net interest income totaled $221.0 million for the nine months ended September 30, 2025, compared to $155.1 million for the nine months ended September 30, 2024.

The increase in net interest income was primarily driven by results that reflect a full nine 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 totaled $31.2 million for the nine months ended September 30, 2025, compared to $28.8 million for the nine months ended September 30, 2024.

Amortization expense associated with fair value marks for time deposits, subordinated debt, and trust preferred securities totaled $5.0 million for the nine months ended September 30, 2025, compared to $6.3 million the nine months ended September 30, 2024.

The tax-adjusted net interest margin was 4.13% for the nine months ended September 30, 2025, compared to 3.78% for the nine months ended September 30, 2024.

The increase in tax-adjusted net interest margin was primarily driven by results that reflect a full nine 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 6.87% for the nine months ended September 30, 2025, compared to 7.01% for the nine months ended September 30, 2024.

The decrease was primarily the result of lower accretion income and an increase in the average balance of non-accrual loans.

The tax-adjusted yield on the total investment securities portfolio was 3.89% for the nine months ended September 30, 2025, compared to 3.81% for the nine months ended September 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,

The yield on interest-bearing deposits decreased to 2.44% during the nine months ended September 30, 2025, from 2.86% during the nine months ended September 30, 2024.

The decrease was primarily due to lower market interest rates on deposit products reflective of decreases in the Federal Funds Rate and other market rates.

The yield on our short-term borrowings for the nine months ended September 30, 2025, was 3.88%, compared to 4.42% for the nine months ended September 30, 2024.

The decrease was due to decreases in the Federal Funds Rate and other short-term market rates and the addition of derivative swaps that decreased our cost of borrowing.

The yield on our subordinated debt assumed in the Merger was 9.65% for the nine months ended September 30, 2025, compared to 10.21% for the nine months ended September 30, 2024.

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

For the Nine Months Ended September 30,

Average Outstanding Balance Interest Income/Expense Average Yield / Rate

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

(3) Calculated based on fair value of investment securities.

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

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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

Nine Months Ended

September 30, 2025 September 30, 2024

GAAP Financial Measurements

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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.

Interest income and interest expense for the nine months ended September 30, 2025, and September 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.

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See table below (in thousands).

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

Nine Months Ended September 30, 2025, compared to September 30, 2024

Dollar Increase (Decrease) Due to Change in:

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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.

Total interest income was $333.9 million for the nine months ended September 30, 2025, compared to $253.4 million for the nine months ended September 30, 2024, an increase of 31.8%.

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

Interest income on loans increased by $75.6 million and interest income on securities increased $2.9 million, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Accretion income associated with acquired loans totaled $31.2 million for the nine months ended September 30, 2025, compared to $28.8 million for the nine months ended September 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.

Total interest expense was $112.9 million for the nine months ended September 30, 2025, compared to $98.3 million for the nine months ended September 30, 2024.

The increase in interest expense was due to results that reflect a full nine 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 $9.8 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Interest on subordinated debt acquired in the Merger was $8.2 million for the nine months ended September 30, 2025, compared to $4.7 million for the nine months ended September 30, 2024.

Interest expense on short-term borrowings amounted to $12.0 million for the nine months ended September 30, 2025, compared to $10.8 million for the nine months ended September 30, 2024.

Provision for Credit Losses

The provision for credit losses was $1.4 million for the nine months ended September 30, 2025, compared to a provision of $23.4 million for the nine months ended September 30, 2024.

For the nine months ended September 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 compared to the nine months ended September 30, 2025.

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

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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)

Nine months ended September 30, Increase (Decrease)

2025 2024 Amount Percent

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Total $ 34,485 $ 24,375 $ 10,110 41.5 %

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 income increased 41.5% for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

The largest percentage increase included a $2.5 million increase in income from company-owned life insurance for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

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

The third largest percentage increase included a $2.4 million increase in bank debit and other card revenue for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

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

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

Nine months ended September 30, Increase (Decrease)

2025 2024 Amount Percent

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Equipment rentals, depreciation and maintenance 12,092 18,643 (6,551) (35.1)

Other 31,755 29,037 2,718 9.4

Core deposit intangible amortization 11,869 7,162 4,707 65.7

ATM, card, and network expense 3,646 3,299 347 10.5

FDIC and other regulatory assessments 2,978 2,500 478 19.1

Other operating 28,690 33,255 (4,565) (13.7)

Total $ 147,061 $ 136,423 $ 10,638 7.8 %

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.

Non-interest expense increased $10.6 million, or 7.8%, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

The increase was primarily due to results that reflect a full nine months of combined operations after the Merger but reflect some continued operating efficiency gains as a result of the merger, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

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

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.

Income tax expense was $20.0 million for the nine months ended September 30, 2025, an increase of $16.2 million from income tax expense for the nine months ended September 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 nine months ended September 30, 2025, when compared to the nine months ended September 30, 2024.

For the nine months ended September 30, 2025, the effective tax rate was 18.7%, while the effective tax rate was 19.0% for September 30, 2024.

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

Net income applicable to common shares for the three months ended September 30, 2025, was $29.7 million, compared to net income applicable to common shares of $27.4 million during the three months ended September 30, 2024.

The $2.3 million increase was due to a decrease in interest expense, partially offset by a decrease in interest income, an increase in non-interest income, and a decrease in non-interest expense for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Net interest income increased by $591.0 thousand to $73.8 million for the three months ended September 30, 2025, compared to $73.2 million for the three months ended September 30, 2024.

The main driver for this increase was results that reflect lower rates on interest-bearing liabilities which was partially offset by a decline in interest income, primarily related to lower accretion income, when compared to the three months ended September 30, 2024.

For the three months ended September 30, 2025, the Company recorded credit provision expense of $262.0 thousand compared to a provision of $147.0 thousand for the three months ended September 30, 2024.

For the three months ended September 30, 2025, credit loss expense on loans and AFS securities was $574.0 thousand compared to $85.0 thousand for the three months ended September 30, 2024.

For the three months ended September 30, 2025, the increase in credit loss expense on loans and AFS securities was offset by a credit loss recapture of $312.0 thousand on off-balance sheet credit exposures.

For the three months ended September 30, 2024, there was a credit loss expense of $62.0 thousand on off-balance sheet credit exposures.

Non-interest income increased by $1.0 million, or 9.1%, to $11.6 million for the three months ended September 30, 2025, as compared to $10.6 million for the three months ended September 30, 2024.

Increases in fiduciary and wealth management, net gains on securities, bank debit and other card revenue, and other non-interest income exceeded declines in service charges and fees income and income from company-owned life insurance for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Non-interest expense decreased by $2.7 million, or 5.4%, to $48.1 million for the three months ended September 30, 2025, as compared to $50.8 million for the three months ended September 30, 2024.

The decrease was primarily due to continued operating efficiency gains, post-merger, that were realized after the merger and during the three months ended September 30, 2025, compared to the three months ended September 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 $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,

Net interest income totaled $73.8 million for the three months ended September 30, 2025, compared to $73.2 million for the three months ended September 30, 2024.

The increase in net interest income was primarily driven by results that reflect lower rates on interest-bearing liabilities which was partially offset by a decline in interest income, primarily related to lower accretion income, when compared to the three months ended September 30, 2024.

Accretion income associated with acquired loans totaled $8.2 million for the three months ended September 30, 2025, compared to $15.5 million for the three months ended September 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 September 30, 2025, compared to $3.8 million for the three months ended September 30, 2024.

The tax-adjusted net interest margin was 4.08% for the three months ended September 30, 2025, compared to 4.07% for the three months ended September 30, 2024.

The increase in tax-adjusted net interest margin was primarily driven by results that reflect lower rates on interest-bearing liabilities, partially offset by a decline in interest income, primarily related to lower accretion income, when compared to the three months ended September 30, 2024.

The yield for the taxable loan portfolio was 6.76% for the three months ended September 30, 2025, compared to 7.34% for the three months ended September 30, 2024.

The decrease was primarily the result of lower accretion income for three months ended September 30, 2025 compared to the three months ended September 30, 2024.

The tax-adjusted yield on the total investment securities portfolio was 3.97% for the three months ended September 30, 2025, compared to 3.91% for the three months ended September 30, 2024.

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

The yield on interest-bearing deposits decreased to 2.37% during the three months ended September 30, 2025, from 3.02% during the three months ended September 30, 2024.

The decrease was primarily due to lower market interest rates on deposit products reflecting decreases in the Federal Funds Rate and other market rates.

The yield on our short-term borrowings for the three months ended September 30, 2025, was 3.85%, compared to 4.06% for the three months ended September 30, 2024.

The decrease was due to decreases in the Federal Funds Rate and other short-term market rates and the addition of derivative swaps that decreased our cost of borrowing.

The yield on our subordinated debt assumed in the Merger was 9.49% for the three months ended September 30, 2025, compared to 10.16% for the three months ended September 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 September 30, 2025, and September 30, 2024, for comparison (dollars in thousands).

For the Three Months Ended September 30,

Average Outstanding Balance Interest Income/Expense Average Yield / Rate

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

(3) Calculated based on fair value of investment securities.

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

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Three Months Ended

June 30, 2025 June 30, 2024

September 30, 2025 September 30, 2024

GAAP Financial Measurements

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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.

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

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See table below (in thousands).

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

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

Dollar Increase (Decrease) Due to Change in:

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Interest Income

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.

Total interest income was $111.2 million for the three months ended September 30, 2025, compared to $118.5 million for the three months ended September 30, 2024, a decrease of 6.2%.

The decrease in interest income was primarily due to lower accretion income when compared to the three months ended September 30, 2024.

Interest income on loans decreased by $8.6 million and interest income on securities increased $714.0 thousand, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Accretion income associated with acquired loans totaled $8.2 million for the three months ended September 30, 2025, compared to $15.5 million for the three months ended September 30, 2024.

Interest Expense

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.

Total interest expense was $37.4 million for the three months ended September 30, 2025, compared to $45.3 million for the three months ended September 30, 2024.

The decrease in interest expense was due to results that reflect lower rates on interest-bearing liabilities, and lower amortization expense associated with fair value marks for liabilities acquired in the Merger.

Interest expense on interest-bearing deposits decreased by $9.2 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, due to lower market rates.

Interest on subordinated debt acquired in the Merger was $2.7 million for the three months ended September 30, 2025, compared to $2.8 million for the three months ended September 30, 2024.

Interest expense on short-term borrowings amounted to $4.4 million for the three months ended September 30, 2025, compared to $3.1 million for the three months ended September 30, 2024, due to higher average balances.

Provision for (Recapture of) Credit Losses

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.

The provision for credit losses was $262.0 thousand for the three months ended September 30, 2025, compared to a provision of $147.0 thousand for the three months ended September 30, 2024.

For the three months ended September 30, 2025, credit loss expense on loans and AFS securities was $574.0 thousand compared to $85.0 thousand for the three months ended September 30, 2024.

For the three months ended September 30, 2024, there was a credit loss expense of $62.0 thousand on off-balance sheet credit exposures.

Non-interest Income

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

Three months ended June 30,

Three months ended September 30,

Increase (Decrease)

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Service charges and fees 2,070 2,509 (439) (17.5)

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

Net gains (losses) on securities 212 — 212 N/A

Income from company-owned life insurance 1,152 1,330 (178) (13.4)

2 unchanged sentences

Total $ 11,585 $ 10,616 $ 969 9.1 %

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 income increased 9.1% for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The largest dollar and percentage increase was a $989.0 thousand increase in other non-interest income for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

This increase was driven by an increase in the utilization of services and fees in other non-interest income categories for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The fiduciary and wealth management increase was driven by increased wealth and fiduciary services performance, while the increase in net gains from securities was driven by security sales.

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 June 30,

Three months ended September 30,

Increase (Decrease)

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Equipment rentals, depreciation and maintenance 3,908 4,699 (791) (16.8)

Other 16,297 22,574 (6,277) (27.8)

Core deposit intangible amortization 3,683 4,297 (614) (14.3)

ATM, card, and network expense 1,200 1,640 (440) (26.8)

FDIC and other regulatory assessments 976 1,037 (61) (5.9)

Other operating 9,569 10,205 (636) (6.2)

Total $ 48,092 $ 50,826 $ (2,734) (5.4) %

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.

Non-interest expense decreased $2.7 million, or 5.4%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The decrease was primarily driven by continued operating efficiency gains, post-merger, that were realized after the merger and during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The largest dollar decrease for the three months ended September 30, 2025, compared to the three months ended September 30, 2024 was $791.0 thousand for equipment rentals, depreciation and maintenance, mostly driven by continued operating efficiencies, while core deposit intangible amortization declined due to its accelerated amortization method.

ATM, card and network expense, pensions and other employee benefits, and other non-interest expense also declined due to continued operating efficiencies for the three months ended September 30, 2025, compared to the three months ended September 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 $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.

Income tax expense was $7.0 million for the three months ended September 30, 2025, an increase of $1.8 million from the tax expense of $5.2 million for the three months ended September 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 September 30, 2025, when compared to the three months ended September 30, 2024.

For the three months ended September 30, 2025, the effective tax rate was 19.0%, while the effective tax rate was 15.8% for September 30, 2024.

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

Assets increased by $76.9 million to $7.9 billion as of September 30, 2025, compared to $7.8 billion as of December 31, 2024.

Loans, net of ACL, decreased by $112.3 million from $5.6 billion as of December 31, 2024, to $5.5 billion as of September 30, 2025.

Deposits decreased by $103.2 million and amounted to $6.4 billion at September 30, 2025, compared to $6.5 billion at December 31, 2024.

Short-term borrowings increased by $85.0 million to $450.0 million as of September 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 $86.1 million at September 30, 2025, compared to $111.9 million at December 31, 2024.

During the quarter ended September 30, 2025, $30.0 million of subordinated debt was redeemed by the Company.

Investment Securities

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

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

During the nine months ended September 30, 2025, the unrealized losses on our holdings decreased $33.6 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 June 30, 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 September 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 June 30, 2025, and December 31, 2024 (in thousands):

June 30, 2025

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

September 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 June 30, 2025.

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

The overall weighted average duration of the Company’s investment portfolio is 4.6 years at September 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.

June 30, 2025

September 30, 2025

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

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

June 30, 2025

September 30, 2025

December 31, 2024

8 unchanged sentences

Loans, net $ 5,491,875 $ 5,604,196

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 loan portfolio, excluding ACL, at September 30, 2025, decreased by $112.8 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 September 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).

June 30, 2025

September 30, 2025

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

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The Company’s nonaccrual loan balances increased by $49.6 million from December 31, 2024, while the Company’s loans 90 days past due and still accruing increased $1.0 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

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 September 30, 2025, totaled $91.8 million, an increase of $50.6 million from $41.2 million at December 31, 2024.

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

September 30, 2025 December 31, 2024

Non-accrual loans $ 85,517 $ 35,871

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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 $0.7 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

The Company recorded a provision expense of $574.0 thousand and a provision of $85.0 thousand on loans for the three months ended September 30, 2025, and September 30, 2024, respectively, and a provision of $2.2 million and a provision of $19.5 million on loans for the nine months ended September 30, 2025, and September 30, 2024, respectively.

For the nine months ended September 30, 2024, the Company recorded a $23.9 million provision directly to the allowance for credit losses to establish an allowance for acquired PCD loans.

This allowance for acquired PCD loans did not result in an additional provision expense for the nine months ended September 30, 2024.

Gross charged-off loans were $519.0 thousand and $305.0 thousand for the three months ended September 30, 2025, and September 30, 2024, respectively and $3.5 million and $947.0 thousand for the nine months ended September 30, 2025, and September 30, 2024, respectively.

Gross recoveries totaled $293.0 thousand and $20.0 thousand for the three months ended September 30, 2025, and September 30, 2024, respectively and $856.0 thousand and $38.0 thousand for the nine months ended September 30, 2025, and September 30, 2024, respectively.

The ACL as a percentage of gross loans, net of unearned income, was 1.22% and 1.22% as of September 30, 2025, and September 30, 2024, respectively.

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

Three months ended Nine months ended

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

Loans outstanding at end of period $ 5,559,479 $ 5,574,037 $ 5,559,479 $ 5,574,037

30 unchanged sentences

(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 June 30, 2025, and December 31, 2024 (dollars in thousands).

June 30, 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 September 30, 2025, and December 31, 2024 (dollars in thousands).

September 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 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.

As of September 30, 2025, the Company has available unused borrowing capacity of $4.2 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 June 30, 2025, and December 31, 2024, respectively (dollars in thousands):

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

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

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

Short-term borrowings $ 450,000 $ 365,000

Weighted average interest yield at end of period 3.85% 3.35%

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

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

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

Subordinated debentures, net $ 68,906 $ 94,872

2 unchanged sentences

Weighted average interest yield at end of period 9.49% 10.08%

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.

Total deposits decreased by $103.2 million from December 31, 2024, to September 30, 2025, primarily due to a decrease in brokered deposits of $120.4 million.

The Company’s brokered time deposits amounted to $124.4 million as of September 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 decreased by $11.6 million from December 31, 2024 to June 30, 2025.

Excluding the brokered deposit balance, the total deposit balance increased by $17.2 million from December 31, 2024 to September 30, 2025.

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

June 30, 2025

September 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 $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

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 September 30, 2025, and December 31, 2024, respectively.

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

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

September 30, 2025

Due within 3 months or less $ 149,656

4 unchanged sentences

Shareholders’ Equity

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 $7.9 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.

Total shareholders’ equity at September 30, 2025, was $822.2 million, compared to $730.2 million at December 31, 2024.

Shareholders’ equity increased by $92.1 million mostly due to an increase in earnings and a decrease in other comprehensive loss since December 31, 2024.

Accumulated other comprehensive loss decreased by $27.3 million from December 31, 2024, to September 30, 2025, from $(95.7) million to $(68.5) 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